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Billions still flowing to TBs

Last week was a good week for the government, as the Bank of Namibia attracted over N$3,2 billion on its treasury bills auction – still indicating that there remains a dire need for quality assets for investors to pour money into in the country.

This is despite the offer being only for N$1,25 billion. The 91-day, 182-day, 273-day and 364-day treasury bills were all over-subscribed, with the 364 day bills attracting over N$1,2 billion.

The trend from the recent treasury bill auctions is that longer dated treasury bills such as the 273-day and the 364-day bills are attracting much capital and last week saw the central bank being enticed by many offers worth N$2,1 billion.

According to the auction results, the varying treasury bills were all seeking to rake in N$300 million, apart from the 273-day bills which was offering and allocated N$350 million.

In total, N$1,25 billion was allocated from 36 bids, while 100 bids worth N$1,95 billion were rejected and are now making rounds to seek investment grounds or wait for another auction run slated for this week Thursday, where the state is still seeking for N$1,02 billion.
Thursday, 22 June, will also see the maturity of a 364-day treasury bill maturing and if not reinvested will free up some N$500 million back into the investment seeking money pool.

For the 2023/24 fiscal year, the government is seeking to raise N$7,4 billion, which will be sourced from the domestic market, distributed among the three local instruments, for which treasury bills is allocated N$1,5 billion (21%), fixed-income bonds with N$4,7 billion (64%) and N$1,1 billion on Inflation-linked bonds (15%).

Despite auctions pulling in many offers, many investors are not divesting their funds, and continue rolling over invested incomes.
The state has also decided that for the 2023/24 fiscal year, the central bank has introduced smaller and more frequent treasury bills auctions, where all four tenors will be issued at the same time.

Over the past years, pension funds have dominated the lending to the state on the bonds side, while banks have largely played king in the treasury bills arena.

Private entities of late have been also tapping into this available cash.

Last month, Gondwana announced that it had removed itself from the shackles of commercial banks and listed a N$250 million bond on the Namibian Stock Exchange.

According to an internal memo by Gondwana’s management, the listing of this bond has always been on the cards as the company was seeking to free itself from the “restrictive and often cumbersome regulations associated with commercial bank financing”.

The bids received for this new issuance were at N$475 million, and again tells that the local economy has much floating capital seeking to locate solid assets for investment.

Many local companies have been avoiding commercial banks over the last few months, with the private sector credit extension growth for corporates in April at just 3,1%.

The high repo rate, now at 7,75%, has been keeping commercial entities away from commercial bank’s doors for some time.
Email: @Lasarus_A