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Nam bonds strengthen on the market

Tue, 22 April 2014 02:17
by Honorine Kaze
Business

Namibia made N$1.9b in bonds trading on the Namibian Stock Exchange (NSX) in 2013, compared to N$2.7b registered in 2012, the Bank of Namibia (BoN)’s latest annual report notes.
Correspondingly, the turnover ratio of Government fell from 29.5% recorded in 2012 to a rate of 18.2 % in 2013.
During the year under review, Government, as part of the 2013/14 budget deficit funding strategy, listed one medium-term bond and two long-term bonds, to enable Government to raise funding at a relatively low cost of borrowing.
The new term bond is the 8.50% Government Code (GC) 25, which was introduced to supplement the active bonds in the year and has an eight to 15-year maturity range, the report states.
“GC25 is maturing on 15 April 2025 and was issued on 1 August 2013. The long-term bonds are the nine percent GC32 and the 9.50% GC35, which are due on 15 April 2032 and 15 July 2035, respectively”.
Therefore, with the additional new bonds, the total number of domestic Government bonds outstanding, increased from eight in 2012 to 11 in 2013, with nine of those being actively issued in the primary market.
In line with the increased issuance of bonds, BoN notes the nominal value of domestic Government bonds outstanding increased from N$9.24b in December 2012, to N$10.89b in 2013.
The positive economic outlook of 2014 predicted by BoN in the last Monetary Policy Committee (MPC) has also been stressed in the latest MPC, with strategic communications and financial sector development director, Ndangi Katoma, saying the domestic forecast still stands at 5.3% for 2014.
The positive sentiment is becoming apparent on the bonds market, as shown on the NSX in the past three months.
Amongst all 11 Government bonds trading on the market, N$15.7b in total was raised by end of January, with the Government bond code 24 (GC24) raising the most at N$2.2b, followed by GC18 at N$2.1b. The newly-listed bonds have also shown some improvement from last year.
By the end of January, the three bonds GC32, GC35, GC25 stood at N$48m, N$20m and N$171m, respectively.
Government bonds continued their upward trend, trading at N$16.1b by end of March, GC24 still leading the pack, followed by GC18.
However, during 2013, the Namibian bonds trading on the international market, showed a strong performance, the BoN says.
The yield on Namibia’s 10-year US$500m (N$5b) Eurobond reached the highest level since issuance, reaching a high of 5.32% during June, from just below four percent.
Furthermore, the performance of the N$850m bond trading on the Johannesburg Securities Exchange (JSE) rose at the end of May 2013, reaching the highest average level of 9.01% during August.
International reserves, according to Katoma, stand at N$17.5b compared to the N$18.2b announced in February.
“The level remains sufficient to maintain the fixed exchange rate to the rand. Going forward, the rapid growth of imports and the sustained double-digit growth rate in instalment credit may put pressure on reserves, thus warranting monitoring,” he stressed on.