Africa-Press – Namibia. A CALL out by the Bank of Namibia last week seeking N$2,1 billion for the state has attracted a whopping N$4,2 billion, the central bank announced on Wednesday.
This amount is double what the bank was looking for and presents an economic scenario where there’s more money looking for long-term and risk-free investments.
The bonds that were up for auction have a maturity date of between 2 and 29 years and according to the auction results, they were all oversubscribed. Oversubscription was mainly rife on bonds with a longer maturing date – with the GC50 oversubscribed by N$147 million.
The GC50 had N$60 million up on auction, and was oversubscribed by 245%. It is paying a 10,5% coupon. Following the GC50, is the GC27 which was oversubscribed by 240%.
On offer were both normal (N$1,6 billion) and inflation-linked (N$400 million) bonds, and the government was auctioning off as little as N$50 million. Government bonds are financial instruments through which the state borrows.
The minimum amount for Namibia is N$50 000, and the coupon (interest) paid on this is always more than the average interest paid on a savings account, as well as some money market products.
Normal bonds pay a coupon of 8% and above, while inflation-linked bonds average between 4% and 4,8%. According to the government’s borrowing plan, the state is expected to sweep over N$2,7 billion from the market this month in fixed income securities, if treasury bills are included.
Although the public has various avenues in which to invest their savings, government securities offer the most stable investment. Over the years, government bonds have been mainly taken up by pension funds.
According to the government’s borrowing strategy for this fiscal year, the state wants to raise at least N$12,9 billion. At least N$10,8 billion has been allocated to fixed-rate bonds, while inflation-linked bonds are projected to bring in the N$2,1 billion remainder.
