By: Nghiinomenwa-vali Erastus
The Government will seek to borrow N$650 million from the market (from corporates and individuals) to fulfil its budgetary promises.
According to an invite by the Bank of Namibia, it plans to hold an auction next week, Thursday, 1 September, to raise N$650 million for Tate Shiimi to fulfil what he promised.
This will be done through an auction of three months’ treasury bills (91-Days ) that intend to raise N$650 for Tate Iipumbu Shiimi to allocate to OMAs.
The auction or borrowing calendar shows that the Government will be borrowing any undisclosed amount on 01 October through the 3-month T-Bills.
This is indicated by the revised auction calendar, which guides those interested in growing their money through government debt instruments.
The TB is the cheapest government borrowing note, with tenders required to be in multiples of N$10,000, with a minimum of N$10,000.
Tenders must be submitted via Bloomberg by 10h30 on Thursday, 1 September 2022.
Those who do not have access to Bloomberg but want to invest in the 91- T-Bills tenders may also email the central bank via email@example.com by 10H00 on the auction.
The subscription forms are available at the Bank of Namibia.
Thus, tenderers must confirm telephonically or via email the receipt of their tenders with the Bank of Namibia’s Investment and Domestic Markets Division.
Treasury Bills (TBs) are short-term Government debt instruments issued by the Namibian Government, denominated in Namibia Dollars (NAD).
The Government uses Treasury Bills as a short-term funding instrument and as a tool to manage the Government’s liquidity.
These instruments have a maturity of less than one year, are sold at a discount to their maturity value, and carry no coupon.
TBs are issued to the market at different maturities, ranging from 91 days to 364 days. The current maturities on the issue are 91, 182, 273, and 364 days. Treasury Bills are redeemable at par on maturity.
The instruments have lower risk than most investments. Returns can be pre-determined and fixed as the investor desires.
For the new investors with no brokers, an investor wishing to purchase N$100 000 worth of 91-day TB at a yield of 6.11% will pay a price of N$98.5 per N$100, which is equivalent to the price of N$98,500.
Upon maturity, an investor will get N$100,000, thus earning a return of N$1,500 over the three months.
The return on government securities is Tax-free as provided for by Section (16) (1)(1) of the Namibian Income Tax Act of 1981.
Due to the ongoing budget deficit, the Government will consistently keep coming to the market for more funds to supplement their revenue- an opportunity for those with savings.