Ethiopia to launch secondary bond market

Apr 09, 2015

The Central Bank said it will also introduce corporate bonds.

The National Bank of Ethiopia (NBE) said it will introduce a secondary bond market and corporate bonds in the next fiscal year.

In an interview with newspaper Addis Fortune, vice governor Yohannes Ayalew said the secondary bond market will allow primary bond holders to sell their bonds to third parties without having to wait for the bond maturity date.

He added that Corporate bonds will also be allowed for any corporate entity, which has a legal personality and fulfils the eligibility conditions, which will be provided in the directive the National Bank will issue in the near future.

The objective, according to the NBE, is to introduce an alternative way of financing. The NBE will serve as the regulatory body for the resale and a directive will be issued for the secondary bond market.

The vice governor said studies the central bank has conducted recently indicate that a secondary market is more important than a primary market in creating an active market daily, increasing the financial flow and encouraging savings.

Furthermore, he said corporate bonds will encourage people to move to capital market investment, as they are more profitable than shares due to the fact the profit is not determined by the share of the profit of the company.ADNFCR-2976-ID-801782867-ADNFCR