- Bank of Namibia to auction $113mn in bonds on Aug. 27, followed by a Treasury bill auction
- Analysts warn lack of financial inclusion leaves ordinary Namibians sidelined from debt markets
WINDHOEK, NAMIBIA – The Bank of Namibia will raise N$2 billion ($113 million) through a government bond auction on Aug. 27, according to investment advisory firm Simonis Storm.
This will be followed by a Treasury bill auction scheduled a day later. Settlement for both will take place on Aug. 29, the advisory firm added.
Efforts by Allen Dreyfus to obtain direct comment from the Bank of Namibia were unsuccessful. Several brokers criticised what they described as a lack of transparency and limited access for ordinary Namibians to participate in the country’s debt market.
The Simonis Storm statement said the bond issuance would comprise N$1.5 billion in nominal fixed-rate bonds and N$500 million in inflation-linked instruments.
“This comes after a recent announcement by BoN that an additional N$2 billion will be sourced via the domestic market due to delays in external sourcing,” the firm noted, adding that overall banking industry liquidity stands at N$7.4 billion with the Namibian position at N$1.67 billion.
Executive Director at the Ministry of Finance, Micheal Humavindo, told Allen Dreyfus that individuals can only participate directly in the primary auction if registered with the central bank, although the market remains dominated by institutional investors.
“Individuals can register with the BoN as eligible participants though this is mostly dominated by institutional investors,” Humavindo said. He added that citizens may also gain indirect exposure through banks, brokers, pension funds or asset managers, while bonds can be traded later on the secondary market through the Namibian Stock Exchange.
Calls for wider access
A local stockbroker, who requested anonymity, said reforms aimed at deepening participation, including legislation on Direct Securities Deposits and the Financial Institutions and Markets Act (FIMA), have stalled amid public opposition.
“There are laws in Namibia which are there to protect individuals and to safeguard money so that it can be invested on the money market, but currently our financial literacy as a country is quite low,” the broker said.
“The current treasury bonds require N$10,000 while the government bond is N$50,000, this already excludes some people with savings to participate in the bond market. But with a law that governs Direct Securities Exchange through the stock market, ordinary Namibians can invest in shares for as little as N$50,” the broker added.
Strong investor appetite
Despite these barriers, Namibia’s previous auction drew strong demand. Simonis Storm said bids totalled nearly N$1.7 billion against an initial offer of N$487 million, with investors particularly active in the GC35 bond, which attracted N$240 million in bids for just N$40 million in allocation.
The firm noted significant yield compression, with the GC28’s highest yield accepted dropping 51 basis points to 8.29%, while the GC32 fell 47 basis points to 9.38%. Longer-dated bonds such as GC48 and GC50 also recorded declines of 44 basis points.
Brokers told Allen Dreyfus that while institutional demand remains strong, efforts to broaden financial literacy and market access will be critical as Namibia faces external financing challenges and a Eurobond maturity in October.
