Stanbic Raises Cash For Diamond Beneficiation

By Wanetsha Mosinyi
Staff Writer | Monday June 16, 2008 00:00

The bank's managing director, Dennis Kennedy said on Friday when listing the three bonds namely SBBL 046, SBB L047 and SBBL 048 that they are very hungry for business. He was referring to the financing of working capital needed by the 16-diamond cutting and polishing companies in the country.

Kennedy said they listed the bonds to give the bank a robust balance sheet to enable it to lend money and play a significant role in the development of the local economy.

Presenting a paper at the Botswana Economic Forum last week, Tim Marsland of Bifm Capital said local banks are currently sitting on over P20 billion excess capital that is ripe for investment vehicles. He said the majority of local banks' loan book goes to household credit with a tiny fraction being lent to mining despite the sector being the backbone of the economy.

He said the funds invest 70 percent offshore as compared to 30 percent locally due to shortage of assets. 'If you are looking for investment, there is a lot of money available in Botswana,' he said.

However, Kennedy said on Friday that he is positive there is enough investment vehicles in the country. He cited projects like the new university, expansion of airports, Morupule power station and Mmamabula.

'These are mega projects and all of them require funding. The capital will have to come either from capital markets or local banks. Projects like Mmamabula will of course rely on external funding but a proportion of the capital will be raised locally.'

Stanbic has been awarded a P120 million contract to fund the expansion of Morupule B coal project. The bank has been involved in several bond transactions. Last week, it was a joint arranger of African Copper's P200 million note issue programme. Stanbic was the sole advisor of government's P5 billion-bond issue.

The listing of the bank's bonds last week is expected to improve liquidity in the stock exchange and to solidify the yield curve on bond trading.

Botswana Stock Exchange (BSE) CEO Herin Mendis acknowledged that they tend to focus on equity than bonds. He however said the local bourse will soon come up with an internal strategy to make bonds more liquid.