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August bond auctions raise N$680m for state

THE state has managed to overborrow this month over its two auctions for the month – raking in N$680 million in bonds from the market.

This is more than the N$315 million set aside as the only amount the Bank of Namibia (BoN) is supposed to borrow on behalf of the state.

There were only two auctions set for this month, which both saw oversubscriptions and over-allotments.

At this week’s auction, the state borrowed N$265 million, despite conducting an auction to raise only N$215 million.

Answering to the state’s borrowing spree last week, deputy BoN governor Ebson Uanguta said it was indeed true that a lot was being borrowed at a faster rate.

Asked whether this excess borrowing would crowd out private-sector investments, Uanguta said there is currently no indication of this.

He said market liquidity indicates that sufficient cash is available for both the state and the private sector.

Active bonds at the moment are the following fixed-rate bonds: the GC26, GC28, GC32, GC35, GC37, GC40, GC43, GC45, GC48 and GC50.

Active inflation bonds include the GI27, GI29, GI33 and the GI36.

Of the above, the GC50 bond is paying better coupons at 10,25%, and has thus far raised over N$2,6 billion for the state.

All fixed-rate bonds are paying coupons of 8,5% and above, while inflation-linked bonds are all paying below inflation at between 4% and 4,8%. The next auctions for bonds will take place on 7 September.

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