By: Nghiinomenwa Erastus
The Bank of Namibia will pay its second interest payment for the year on four of its bonds today.
The central bank’s borrowing calendar indicates that today is the second coupon payment for the GC23, GC24, GC25, GC26 bonds.
According to the information from the central bank, a total of N$1,2 billion will be paid out in coupons to bondholders.
A bond is a fixed income instrument representing a loan made by an investor to a borrower, which is the government in this case.
It is an I-Owe-You between the lender and borrower that includes the loan details and its payments.
From an individual/investor perspective, bonds are an investment opportunity to grow one’s savings through interest.
The Namibian government internal registered stock/bonds pay interest (coupon) half-yearly.
Out of the 22 government bonds listed on the Namibia Stock Exchange, 11 bonds pay coupons every 15 April and 15 October during the lifetime of the Bond.
The others pay coupons on 15 January and 15 July.
By the end of September 2021, the outstanding amount (money borrowed by the state through and repaid) on the GC23 was N$4, 4 billion.
Coupon/interest payment for the GC23 will be calculated at 8,85% per annum on the total nominal amount of the fully paid allotment.
The GC24 Bond has an outstanding amount of N$4,1 billion owed to investors by the end of September 2021.
The coupon/interest payment for the GC24 will be calculated at 10,50% per annum on the total nominal amount of the fully paid allotment.
On the GC25, the government still owe investors N$3,9 billion by the end of September this year, which they are using and, as a result, accumulate interest/grow.
Coupon/interest payment on the GC25 will be calculated at 8,50% per annum on the total nominal amount of the fully paid allotment.
Then finally, the newly GC26 government started borrowing through this Bond last year, and by the end of September this year, it owed investors N$3,2 billion.
The interest payment for those who invested in the GC26 is calculated at 8,50% per annum on the total nominal amount of the fully paid allotment.
According to the borrowing, calendar an amount of N$12,9 billion has been allocated to be borrowed through bonds.
In cases where revenue received from taxation and levies is lower than the planned expenditure, the current financial government finances the difference (deficit) mainly through borrowing by issuing government securities.
A sum of N$10,8 billion has been allocated to fixed-rate bonds.
The government aims to raise N$6 billion through domestic bond issuance and utilise the proceeds to supplement the Sinking Funds’ balances and the budget deficit.
The transactions will be undertaken at special auctions, which are open to all market participants and allocated at prevailing market prices.
Email: erastus@thevillager.com.na
