By: Nghiinomenwa-vali Erastus
On Thursday this week, the government will auction four of its Treasury Bills borrowing instruments as it seeks to borrow N$1.5 billion, according to a tender invite released by the central bank.
These are the 91-day Treasury Bills, 128-day Treasury Bills, 272-day Treasury Bills, and 364-day Treasury Bills.
According to the invite, the government already owes investors around N$1.4 billion through the same Treasury Bills (TBs), as shown in the maturing amount by the central bank.
As a result, the government aims to rollover, or ask to keep its existing debt during the auction.
The tender invite, however, shows that the government not only intends to keep the maturing amount in the 4 TBs, but to to raise more funds.
The difference between the amount on offer and the maturing amount totals N$124 million, as the new amount to be borrowed on 31 July through the same TBs.
The central bank asks for N$380 million through the 91-day TB for three more months, while it has a maturing amount of N$355 million. As a result, it will borrow only N$25 million and roll over the existing debt for those three months.
As for the 182-day TB, the government seeks N$380 million whilst owing N$350 million that is maturing. This means on 31 July 2025, the government only intends to borrow the difference (N$30 million) through this TB rollover.
In the 272-day TB, the government offered to raise N$360 million.
According to the maturing amount for this short-term instrument, the government already owes N$360 million. In this regard, the government will only borrow the difference, which is N$30 million, and roll over the rest.
Through the 4th instrument, which is the longest among the group of short-term fixed income instruments, the government offered to raise N$370 million while owing N$330 million, showing that only N$40 million in new money will be raised during this auction through the 364-day TB.
The rolling of old debt is a strategy that enables the government not to expand its debt bill, but to keep the existing money instead of borrowing new money.
The government borrows through short-term debt instruments, Treasury Bills, which allow it to keep the money for a period not longer than a year.
To invest in this instrument, one needs a minimum of N$10,000, and interest is expressed at auctions organised by the Bank of Namibia. erastus@thevillager.com.na
