Government bonds continue to attract much free funds, and at a recent auction, bidders tendered close to N$600 million for bonds maturing in 13 years.
This is indicative that there are many investors in the country with much patient capital, who are seeking better returns in the safest way.
The government, through the Bank of Namibia, last week had on auction the usual 14 bonds seeking to raise N$190 million, but received tenders worth N$787,4 million.
Auction results as released showed that of that massive oversubscription, much of the funds were targeting long-dated bonds, with those below 10 years only pulling around N$120 million or just 15%.
This could also be because short-term dated bonds only had N$70 million on offer of the N$190 million.
The most subscribed bond was the GC48, which has been an investors’ favourite over the past few auctions.
Last month, analysts at Simonis Storm had said all indicators showed a healthy appetite for bonds, and much liquidity within the Namibian market, which also had the central bank being selective on which instruments to max out in terms of allocation.
At last week’s auction, all 14 bonds were allocated at their offer value of N$190 million.
For the 2023/24 fiscal year, the government is seeking to raise N$7,4 billion, which will be sourced from the domestic market, distributed among the three local instruments, for which treasury bills is allocated N$1,5 billion (21%), fixed-income bonds with N$4,7 billion (64%) and N$1,1 billion on inflation-linked bonds (15%).
Despite auctions pulling in considerable offers, many investors are not divesting their funds, and continue rolling over invested income.
The state has also decided that for the 2023/24 fiscal year, the central bank has introduced smaller and more frequent treasury bills auctions, where all four tenors will be issued at the same time.
Over the past years, pension funds have dominated the lending to the state on the bonds side, while banks have largely played king in the treasury bills arena.
On offer were the common bonds – fixed rate bonds: GC26, GC28, GC32, GC35, GC37, GC40, GC43, GC45, GC48, and the GC50.
Inflation bonds GI27, GI29, GI33 and the GI36 were also all on auction, seeking to raise N$10 million each, with the GI27 subscriptions flat at the N$10 million offer.
On Wednesday, the government will be switching the GC24, at an 8,1% yield to maturity, with a treasury bills auction on Thursday seeking to raise N$930 million.
The full borrowing calendar is available on the Bank of Namibia’s website.
Email: lazarus@namibian.com.na
Twitter: @Lasarus_A
