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By: Nghiinomenwa Erastus

On the 2nd and third of this month, the central bank bonds and treasury bills auction raised N$2,5 billion for minister Iipumbu Shiimi to fulfil his budgetary promises.

This money was raised through 11 internal registered stock/bonds (IRS) and three treasury bills.

As part of its journey to raise between N$30 billion (according to the 2020/21 Borrowing Strategy) to make up for the budget shortfall for the current financial year, which is ending this month.

According to the invites sent out by the Bank of Namibia before the auction, the treasurer wanted to borrow N$2,6 billion in two days through bonds and treasury bills.

A big chunk (N$1,9 billion) was to be/raised through three treasury bills(91-days, 237-days, and 364-days), and the remaining N$670 million was to be raised through 11 internal registered stocks.

The government allocated between N$50 million to N$85 million for each bond, with more borrowed through the short-dated bonds while most long-dated (GC37-GC50) were only allocated N$50-N$55 million.

According to the outcome of the 11-IRS auctions (GC23 to GC50), which was held on the 2nd March 2022, the government raised only N$634,3 million, short with N$35,7 million.

The (N$35,7 million) shortfall was due to two under-subscribed bonds, raising less money as planned- these are the GC43 and the longest dated GC50.

For the GC43, which was not fully subscribed in terms of the amount offered- the treasurer wanted to borrow N$55 million through this bond, but it did not materialize.

According to the auction’s outcome, the central bank received 15 bids for the GC43 worth N$44,3 million, which was lower than what the central bank needed/offered.

Moreover, out of 15 bidders, only six were successful based on price/yield criteria, and as a result, the central bank only raised N$21,3 million through the GC43.

For the GC50, the government wanted to borrow N$50 million- in the auction. The central bank received 12 bids willing to lend only N$36,2 million instead of what was offered.

Nine of the 12 bids successfully allocated N$25,1 million instead of the N$50 million offered.

When it comes to treasury bills (TB)- which are short-term (issued for less than a year), I Owe You notes that the central bank uses to raise funds and keep the central government liquid.

At the same time, it provides the market with investment opportunities with a short duration to maturity (commercial banks mostly scoop these).

The auction for TB was held on 3rd March 2022.

The central bank wanted to raise N$650 million through the 91-days TB – this means the government will borrow this money from those with excess funds or willing to grow their money, then the government returns it after the 91 days with a reward.

All this money was raised, the TB was oversubscribed with bids valued at N$727,5 million received willing to lend their money for 91 days, more than what was offered.

For the 273-days, the government wanted more than half a billion again (N$600 million), which was fully allocated- the central bank received 32 bids worth N$696,9 million- offering more than offered also.

The long-dated TB requires one to invest or lend their money to the government for 364 days.

The central bank received 25 bids for the 364-day TB worth N$843,7 million, more than what is offered (N$630 million), making it the most subscribed TB.

The TB was fully allocated- the central bank got what it intended to borrow.


The Villager analysts measure the market appetite for government securities/investment opportunities using the value of bids submitted and to what extent a bond or TB is over-subscribed (intention to invest by the corporates and retailer investors).

The price/yield ratio is not factored in for this analysis- the price/yield ratio is quite important as the central bank seek those investors that wanna pay more require less reward.

To lower the interest payment and overall redemption of TB who are sold at a discount.

According to the borrowing strategy, the current (around N$30 billion) budget shortfall is the biggest in the country’s history, almost half of total expenditure. The central bank borrowed every other day (mopping the floor).

Almost every IRS, except for the two bonds that were undersubscribed.

For the TB, they all received bids valued more than the central bank required.

This highlights that despite the central bank mopping the floor (capital market) to fund and ensure budget commitments are met- the market still came through as they sought investment opportunities.

This either means that government securities are offering good returns or the country’s capital and money market has less to offer to the country’s large pool of savings.





Julia Heita

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