By: Nghiinomenwa-vali Hangala
The government, through the central bank, has managed to switch N$563.1 million of the funds it owes through the GC27 Bond to other 12 long-term bonds in its first switch auction of the year on Wednesday.
As of the end of March 2026, the government has borrowed N$7.6 billion from investors through the GC27 Bond, set to reimburse this investment in October 2027.
However, to avoid a lump sum payment of this money – which could drain liquidity in the treasury – the government employs a strategy of switch auctions through the Bank of Namibia.
This strategy allows investors to move their investments to other long-term bonds with the promise of continued interest earnings instead of divesting.
This is done in a bidding manner, where investors submit bids indicating how much they are moving and the interest they will require.
Bank of Namibia then chooses the bids that are in the interest of the government using the price/yield ratio.
According to the auction results, 146 bids were received from the investors who are owed by the government through the GC27.
These were looking to switch N$919.9 million.
However, the Bank of Namibia only agreed to switch N$563.1 million during this auction.
The results also show that most of the investors were more interested in the bonds with a short-term horizon, as the GC29 was the most preferred, followed by the GC34, and GC30, respectively.
The government will continue hosting switch auctions this year and next year (before maturity date) to give investors opportunities to move their money, and also avoid paying a large amount upon maturity of the GC27.
The full borrowing and switching is, however, yet to be released together with the 2026/27 borrowing plan.
erastus@thevillager.com.na
