Africa-Press – Namibia. HOLDERS of the Namibian government bond, GC23, yesterday switched N$585 million for bonds maturing at as far as 2050.
HOLDERS of the Namibian government bond, GC23, yesterday switched N$585 million for bonds maturing at as far as 2050.
The government decided that it was going to switch the bond over eight active bonds, and the new deal has reduced the balance to N$4,5 billion.
According to the Bank of Namibia, which facilitated the transaction, over N$1 billion worth of bids were received.
The GC23 is set to mature in October 2023.
Bond switches are not uncommon, and normally conducted as debt management tools.
With Namibia’s debt levels through the roof, analysts and credit rating agencies have highlighted that there was a high probability that the state, over the medium term, would roll over much debt and conduct switch auctions to allow for debt redemption.
Debt switch auctions are also a tool used by treasury to restructure the maturity profile of outstanding debt, and act as a cash management tool, which will enable the government to mitigate rollover risk by smoothing the domestic debt maturity profile towards bond redemptions.
According to an explainer at the Bank of Namibia, this switching will also allow current holders of the source bond (maturing bond) to shift their investments into other longer dated bonds well in advance, and to avoid the risk of not getting an allotment of other bonds upon the maturity of the bonds.
The switching is normally done in line with prevailing market yields for both the source and destination stock, but for the GC23, the Bank of Namibia recently upped the switch yield to maturity to only 8,15%.
The next switch auction will be held next month.
PARATUS RAISES MORE MONEY
It was also recently reported that Paratus Namibia raised a total of N$130 million from its second Namibian bond issuance on two occasions as part of its N$1 billion listed note.
The N$130 million will mature in 2025 (N$30 million), and 2027 (N$100 million).
Other recent capital raised includes N$7 million by TT Treasury (Proprietry) Limited, which will mature in 2037.
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The government decided that it was going to switch the bond over eight active bonds, and the new deal has reduced the balance to N$4,5 billion.
According to the Bank of Namibia, which facilitated the transaction, over N$1 billion worth of bids were received.
The GC23 is set to mature in October 2023.
Bond switches are not uncommon, and normally conducted as debt management tools.
With Namibia’s debt levels through the roof, analysts and credit rating agencies have highlighted that there was a high probability that the state, over the medium term, would roll over much debt and conduct switch auctions to allow for debt redemption.
Debt switch auctions are also a tool used by treasury to restructure the maturity profile of outstanding debt, and act as a cash management tool, which will enable the government to mitigate rollover risk by smoothing the domestic debt maturity profile towards bond redemptions.
According to an explainer at the Bank of Namibia, this switching will also allow current holders of the source bond (maturing bond) to shift their investments into other longer dated bonds well in advance, and to avoid the risk of not getting an allotment of other bonds upon the maturity of the bonds.
The switching is normally done in line with prevailing market yields for both the source and destination stock, but for the GC23, the Bank of Namibia recently upped the switch yield to maturity to only 8,15%.
The next switch auction will be held next month.
PARATUS RAISES MORE MONEY
It was also recently reported that Paratus Namibia raised a total of N$130 million from its second Namibian bond issuance on two occasions as part of its N$1 billion listed note.
The N$130 million will mature in 2025 (N$30 million), and 2027 (N$100 million).
Other recent capital raised includes N$7 million by TT Treasury (Proprietry) Limited, which will mature in 2037.
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