Suva, Fiji, January 27, 2021– The Reserve Bank of Fiji (RBF) has issued a new wholesale corporate bonds regulation, providing guidance to Fijian businesses wishing to raise funds through bonds, and overall make Fiji's finance sector more competitive.
"With the ongoing COVID-19 crisis and its impact on businesses, the development of the corporate bond market and its potential to provide a new source of financing for projects is a timely policy intervention," RBF Governor, Ariff Ali said. "This new initiative will assist firms to diversify their options for raising finance, reduce dependence on a single funding source and improve the competitiveness of our financial sector."
IFC, a member of the World Bank Group, conducted a study on Fiji's corporate bond market in 2019 and found that while there was a thriving government bond market, there had been no issuances of corporate bonds in recent years. The study also found that to have a functioning corporate bond market, there were legal and regulatory gaps that needed to be addressed.
"This is an exciting development for Fiji's capital market and financial sector and aligns the country with other emerging and developed markets," Deva De Silva, IFC Resident Representative to Fiji, Kiribati, Samoa, Tonga and Tuvalu said. "It is also an important development that is linked to the World Bank Group Country strategy for Fiji for the next four years, which aims to improve the livelihoods of Fijians and build their resilience for future sustained recovery."
The Companies (Wholesale Corporate Bonds) Regulations 2021 provides a simplified process for the issuance of corporate bonds to eligible wholesale investors only and ensures there is significant transparency before and after the bonds are issued to limit risks to investors.
Supported by the Australian and New Zealand governments through the "Fiji Partnership", IFC provided technical assistance to the RBF to develop the regulations and related guidelines and rules.
IFC and the RBF held consultations with potential issuers, investors, intermediaries and other market practitioners such as South Pacific Stock Exchange as part of the work to develop the new regulations.
The Fijian government has been a strong advocate for developing capital markets to ensure Fiji has a robust and well-developed financial sector. It has offered targeted tax incentives in its 2020-21 National Budget to benefit companies that will use the bond market to source funding as well as to investors who buy the bonds.
Fiji Partnership
IFC's work in Fiji is supported by the governments of Australia and New Zealand under the Fiji Partnership to unlock private sector investment, promote sustainable economic growth and boost shared prosperity in Fiji.
About RBF
The RBF is the central bank of the Republic of Fiji established under the RBF Act 1983. The principal purposes of the Bank are to regulate the issue of currency and the supply, availability and international exchange of money, to promote monetary stability, to promote a sound financial structure, to foster credit and exchange conditions conducive to the orderly and balanced economic development of the nation, and to regulate the capital markets and insurance industry. For more information, visit www.rbf.gov.fj.
About IFC
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2020, we invested $22 billion in private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org.
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