Africa-Press – Namibia. THE appetite for Namibian government bonds is growing auction after auction, with investors flooding the invitations with over N$1 billion at this week’s offering.
In a span of about a month, investors in Namibian government bonds have tendered N$2,7 billion, when the government was just seeking to raise N$665 million.
This again, as analysts have explained over the past months, shows there is much conservative capital chasing too little investment opportunities in the country.
For this week, the state, through the Bank of Namibia, had on auction N$215 million worth of bonds, but the amount of bids submitted was at N$1,03 billion, leading to an oversubscription of N$816 million (379%).
The Wednesday auction was the last one for the month.
According to the national borrowing plan released by the Ministry of Finance, there is still over N$6,3 billion to be borrowed through bonds before the fiscal year ends.
Next month, the government is expected to borrow N$1,1 billion, which could again be oversubscribed.
Traders in government bonds who spoke to The Namibian on condition of anonymity said the market has become rough and getting their bids recognised is not that easy any longer.
The Namibian reported earlier this month that the increase in the demand for Namibian issued bonds throughout May and June was expected due to the steady returns and safety of bonds.
In his May 2022 fixed income report, Simonis Storm analyst Theo Klein indicated that with the rising domestic demand for Namibian bonds in recent months, local bond yields are likely to be influenced by local investor risk perceptions on public debt sustainability and individual future economic growth outlooks.
Of this week’s auctions – the most demanded bonds were still those that are set to mature between 13 and 23 years.
The most demanded bond in the two June auctions was the GC45, oversubscribed by a whopping N$246 million. The state through this bond in June only wanted to borrow N$40 million.
The least demanded bond was the GC26, which, although it was also oversubscribed, its overflow was minimal at N$48 million. The state sought to borrow only N$30 million using this bond.
Analysts The Namibian spoke to said the oversubscription was also partly caused by South African investors who are trying to take advantage of the interest rate spread that exists between Namibia and South Africa.The week also saw the oversubscription of the 364 treasury bill. The state sought to borrow N$550 million, but the inflow of bids was at N$1,03 billion.
Analysts The Namibian spoke to said this could be a diversion of banks away pumping money in the private sector, that appears now to be riskiy given the high interest and inflation rates.
Namibia was recently downgraded by Moody’s Investor Service but it appears that it is not shrugging off fixed income investors just yet.
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