Africa-Press – Namibia. THE Bank of Namibia has put out an invitation for the purchasing of government bonds, and is seeking to raise over N$2 billion for the state kitty by next Wednesday.
On offer are both normal (N$1,6 billion) and inflation-linked bonds (N$400 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.
For the bonds currently on auction, normal bonds are paying 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.
The auction will include all active bonds and comes at a point when investors are still deciding whether or not to purchase yet to be listed Mobile Telecommunications Limited shares.
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.
“The government aims to raise N$6 billion through domestic bond issuance and utilise the proceeds to supplement the balances on the Sinking Funds for the redemption of the Eurobond,” reads the strategy. These auctions are open to all market participants and are always allocated at prevailing market prices.
The state introduced a new fixed-rate bond this year (GC48), set to mature on 15 October 2048. The furthest in issue is the GC50, expected to mature in 2050. Tomorrow will also see the state redeeming the GC21 bond.
Details on how to participate, and the prospectus on the issue of the auction can be found on the Bank of Namibia website or at their offices in Windhoek and Oshakati.
There have always been talks that these bonds are out of the reach of households, but last year, the central bank’s deputy director for corporate communication Kazembire Zemburuka said the bank was exploring mechanisms for issuing securities exclusively for retail investors.
In conjunction with the Namibia Stock Exchange (NSX), the bank is in the process of introducing a Central Securities Depository (CSD), which will contain individual breakdowns, Zemburuka had said.
At the moment, tenders are to be submitted via Bloomberg, at the Bank of Namibia or faxed to the central bank. Email: [email protected] Twitter: @Lasarus_A
