Long term bonds a hit on the market

24 Oct 2013 13:00

Namibia’s external balance recorded a surplus in line with an increase in the stock of international reserves during the second quarter of the year, according to the Bank of Namibia (BoN)’s financial development report.
BoN deputy governor, Ebson Uanguta, attributes the significantly positive balance mostly to a current account surplus than offset registered outflows in the financial account.
“International reserve stock rose on a quarterly basis by 8.2% to N$16b at the end of the second quarter of 2013, which was equivalent to 15.2 weeks of imports cover by end of June,” he says.
On the domestic side, the investors’ sentiment into long-term Government bonds was reinforced by the significant amount of N$267m, which rose in a tendering process in August from the N$90m in July.
But according to the Market Namibia tender bulletin, “in a monthly record, 12 tenders for internal registered stock were held in August, raising N$267m, compared to July’s N$90m borrowed across four tenders, which had been repeated in June’s full-house on a targeted N$145m.”
With the recently introduced long-term bonds in July, three bonds have so far been issued. Government Code-35- figure representing the lifespan of the bond (GC35) and then the GC25 as well as the GC32 in August.
The GC25 Government bond was inaugurated with two tenders for N$30m, each at the start and at the end of the month. They were oversubscribed by 142% and 129%, respectively and fully allotted.
The GC32, which was inaugurated in August also with two tenders, saw the first become oversubscribed and fully allotted at a N$10m offer while only N$8.5m of the second N$10m of the tender was allotted, after demand fell short by 15%.
Besides the new long-term bonds, the overall bonds on the market have shown quite a strong performance on the Namibian Stock Exchange (NSX).
The total amount raised by the different bonds listed on the market equalled N$18.4b by end of September from the N$17.6b at the end of May.
All the Government bonds (GC14, GC15, GC17, GC18, GC21, GC21, GC27 and GC30, GC32, GC25) had (as of the end of September) raised N$15b, showing a steady increase from May’s N$14.4b, June’s N$14.5b and August’s N$14.7.
GC24 has been the best performing bond throughout the above-mentioned months, raising over N$2b, consistently. It is followed by the GC18, which has shown improvement from N$1.7b by end of May to N$1.9b by the end of September.
The GC25, GC32 and GC35 have stood at N$60m, N$18.5m and N$10m, respectively.
On the other hand, the State-owned Enterprises (SoEs), which float their bonds at the NSX, comprise of the Road Fund Administration, Telecom Namibia and NamPower. They have consistently raised over N$1.4b.
As further shown in the NSX report, the commercial banks (Bank Windhoek, FNB Ltd, Nedbank, Standard Bank of Namibia) have, collectively, consistently raised about N$1.8b.