Bond market subdued despite new listings
Staff Writer | Friday July 15, 2016 12:24
According to the Botswana Stock Exchange (BSE), the value of bonds traded over the period under review was P59 million in comparison to P664.6 million traded over the same period in 2015.
“On the brighter side, corporate bonds traded more than government bonds on a year-to-date period basis. This is an improvement as no corporate bonds trades were executed in the whole of 2015,” the BSE stated.
In the period, the Bank of Botswana, on behalf of government, held two bond auctions during the period under review while Treasury Bill of P500 million were offered. All of these tranches were oversubscribed and fully allotted.
The second quarter of 2016 saw the issuance and subsequent listing of three corporate bonds. These were Botswana Development Corporation’s BDC001 (P225.26 million) and two bonds issued by PrimeTime being PTP021 (P56 million) and PTP (P49 million).
On the back of the government bond auctions and new corporate bond issuances, the market capitalisation of BSE listed bonds increased to P11.3 bn compared to P10.5 bn in the same period in 2015, the BSE said.
The BSE said it has come up with several strategies to try and address constraints affecting bond market development. One of the strategies is a Bond Market Conference, which is also an initiative to promote the visibility of the Botswana Bond Market Association (BBMA). The conference is being organised by both the BSE and BBMA and is scheduled to be held on October 6, 2016 under the theme ‘The Bond Market – A Pillar of the Economy’.
“The conference seeks to bring together stakeholders and participants in the bond market to engage in discussions on topical issues including the building blocks of a robust bond market, opportunities for infrastructure funding through the bond market, promoting an efficient regulatory environment, efficiency and liquidity of the secondary market, among others. Furthermore, this will be an opportunity to nurture relationships between domestic and international stakeholders in the bond market,” the BSE said.
The conference targets all sectors and participants in the bond market. This includes fund managers, issuers, regulators and rating agencies, amongst others. The event is expected to attract over 200 delegates from Botswana and across the continent.
There are currently 41 bonds listed on the bourse with six belonging to government and the rest to corporates.
In the period, bonds listed on the BSE outperformed inflation over the corresponding period.
“The prevailing lower rates of inflation bode well for performance of bonds whose income returns, in the form of coupons, are usually fixed. A low inflationary environment helps the coupons maintain purchasing power,” BSE said.