BSB seeks P1bn in debt programme
Mbongeni Mguni | Friday August 16, 2019 14:38
Typically, issuers use note programmes to float bonds of smaller denominations to the market at regular intervals determined by the issuers’ funding needs. At present, the only state-owned entities with outstanding bonds on the local market include the Botswana Development Corporation, the Botswana Housing Corporation and the Water Utilities Corporation.
Government typically approves the note programme from which the entity then approaches the market with various bonds seeking capital from investors.
According to a notice from the BSB this week, the bank is looking to engage a lead arranger for the note programme who will then guide the process towards approaching the market.
“As part of the implementation of the current business strategy, fund raising plays a critical role in achieving our ambitious goal of growing the loan book by close to 30% as well as execution of our Gemvas funding mandate which also has long dated instruments of up to 20 years, hence the requirement to seek funding that matches the funding profile,” reads the notice.
The BSB is an administrator of the Gemvas scheme under which government guarantees property and vehicle loans to qualifying public servants.
The bank noted that its current debt obligations were only to government, amounting to P105 million and maturing in 2035. In addition, Finance Ministry estimates made available recently indicate that government will pump another P141 million into BSB this financial year for various system upgrades and initiatives.
Potential investors in the BSB’s upcoming note programme could be perturbed by the bank’s breach of the P105 million loan. The loan was to be used to help the BSB submit an application for a banking licence, but the bank used it for “purposes other than those stipulated in the agreement”.
“The bank has voluntarily disclosed this breach to the lender, with a request for condonation of the breach. Until the lender accedes to the bank’s request, the loan is immediately callable by the lender,” the bank noted in its recent Annual Report.