Fiji marks first Corporate Bond Offer under new regulations

PHOTO: Fijian Holdings Limited

Fijian Holdings Limited (FHL) last week opened a Wholesale Corporate Bond offer of F$30 million, stating it marks a major step forward in efforts to diversify the nation’s financial market.

It is the first bond offer by any company under RBF’s Companies (Wholesale Corporate Bonds) Regulations 2021.

This offer is seen as underscoring the importance of enabling regulations and policies that were developed by the Reserve Bank of Fiji (RBF) and South Pacific Stock Exchange (SPX), with support from the International Finance Corporation (IFC).

“This is the first offer to be made under the Companies (Wholesale Corporate Bonds) Regulations 2021, and is an indication of the potential of the capital markets to provide an alternative source of funding for Fijian businesses,” said Reserve Bank of Fiji Governor Ariff Ali. “It also provides a much-anticipated investment opportunity in an environment of low interest rates.”

Once issued, the bonds will also be listed for trading on the SPX Over-The-Counter market.

SPX Acting Chief Executive Officer Pretesh Prasad said the company looks forward to working closely with FHL to ensure this offer translates into a successful listing on the SPX. “This anticipated listing of the Wholesale Corporate Bond…. is in line with our strategic goal to offer investors a diverse range of products and an alternative means for businesses to raise capital through our stock market,” said Prasad.

IFC says investors in Fiji can now access an additional mechanism and make more informed decisions about how to price the debt of different companies. For the issuers of bonds, the new regulatory framework can provide another option to access capital, protecting against periods of financial stress.

Under the Companies (Wholesale Corporate Bonds) Regulations 2021, the bond offer is only open to
eligible investors, and not for retail distribution.

Judith Green, IFC Country Manager for Australia, New Zealand, Papua New Guinea and the Pacific Islands, says, “While an active corporate bond market opens up a range of benefits for issuers and investors, it can also provide tangible gains for the whole economy, including the potential for funds raised to generate economic activity and jobs.”

FHL said the proceeds of the offer will be used to assist in financing the FHL Tower construction – an 18-storey office complex on the corner of Gordon Street and Thurston Road; repay a portion of FHL’s existing drawn bank debt, providing some diversification of funding sources and tenor; and for general corporate purposes.