Appetite for government debt strong
The government raised N$1 billion through the Bank of Namibia's (BoN) sale of government bonds on Friday of last week.
According to the central bank's deputy director for corporate communications Kazembire Zemburuka, “The strong participation in the latest auction highlights several positive developments for the government, especially on the funding side.
In particular, the auction highlights that the appetite for Namibian government bonds remains solid despite the recent downgrade of Namibia's credit rating by Moody's Investor Services in August 2017.”
The auction preceded the maturation of the GC17 government bond on Monday 16 October 2017 where N$794 million was redeemed. According to Zemburuka, with many investors rolling their funds into longer dated instruments, it reinforced investor confidence in the credit quality of Namibia over the long term.
As at the end of the September 2017, government's total domestic debt stood at N$44.3 billion.
Of this amount, N$16.5 billion is in Treasury Bills which mature in less than one year, and N$27.8 billion in bonds.
On Friday both fixed-rate and inflation-linked bonds were auctioned. The fixed rate bonds auctioned include the GC20, GC21, GC22, GC24, GC25, GC27, GC30, GCC32, GC35, GC37, GC40 and GC45. The inflation linked bonds auctioned include the GI22, GI25 & GI29.
Government bond auctions are open to both individuals and institutional investors.
As with previous auctions, various buyers participated in this auction including commercial banks, stock brokers, asset managers as well as individual clients.
The allocation of bids at all government bond auctions is a competitive process which depends on pricing and ticket sizes.
The quantity of bonds purchased is a direct function of the balance sheet, according to the central bank spokesman.
“Institutional investors, including commercial banks, tend to be the biggest buyers of bonds in the domestic market given the size of their balance sheets.
This was also the case for this auction. The participation of individual clients at bond auctions is normally minimal and this auction was no different. The majority of the individuals that participated include those that held the maturing GC17 and wanted to re-invest the funds into longer dated bonds,” said Zemburuka.
As per the auction calendar, the next bond auction is scheduled for Wednesday, 8 November 2017.
The auction calendar is available on the Bank of Namibia website: www.bon.com.na/Bank/Financial-Markets/Public-debt-anagement/Borrowing-calendar.aspx
Augetto Graig
According to the central bank's deputy director for corporate communications Kazembire Zemburuka, “The strong participation in the latest auction highlights several positive developments for the government, especially on the funding side.
In particular, the auction highlights that the appetite for Namibian government bonds remains solid despite the recent downgrade of Namibia's credit rating by Moody's Investor Services in August 2017.”
The auction preceded the maturation of the GC17 government bond on Monday 16 October 2017 where N$794 million was redeemed. According to Zemburuka, with many investors rolling their funds into longer dated instruments, it reinforced investor confidence in the credit quality of Namibia over the long term.
As at the end of the September 2017, government's total domestic debt stood at N$44.3 billion.
Of this amount, N$16.5 billion is in Treasury Bills which mature in less than one year, and N$27.8 billion in bonds.
On Friday both fixed-rate and inflation-linked bonds were auctioned. The fixed rate bonds auctioned include the GC20, GC21, GC22, GC24, GC25, GC27, GC30, GCC32, GC35, GC37, GC40 and GC45. The inflation linked bonds auctioned include the GI22, GI25 & GI29.
Government bond auctions are open to both individuals and institutional investors.
As with previous auctions, various buyers participated in this auction including commercial banks, stock brokers, asset managers as well as individual clients.
The allocation of bids at all government bond auctions is a competitive process which depends on pricing and ticket sizes.
The quantity of bonds purchased is a direct function of the balance sheet, according to the central bank spokesman.
“Institutional investors, including commercial banks, tend to be the biggest buyers of bonds in the domestic market given the size of their balance sheets.
This was also the case for this auction. The participation of individual clients at bond auctions is normally minimal and this auction was no different. The majority of the individuals that participated include those that held the maturing GC17 and wanted to re-invest the funds into longer dated bonds,” said Zemburuka.
As per the auction calendar, the next bond auction is scheduled for Wednesday, 8 November 2017.
The auction calendar is available on the Bank of Namibia website: www.bon.com.na/Bank/Financial-Markets/Public-debt-anagement/Borrowing-calendar.aspx
Augetto Graig
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