BoB mulls retail bonds from P15bn note programme

Retail bonds are an ‘IOU’ in which an investor agrees to loan money to an individual, company or government in exchange for a predetermined interest rate. Typically, government would hold auctions through the Bank of Botswana (BoB) giving Batswana a chance to bid for the bonds and secure their funds in a new investment class featuring an attractive interest rate. In Africa, South Africa and Kenya have the most successful government-backed retail bond markets.

This week, in response to BusinessWeek enquiries, central bank executives said proposals had been made that the retail bond programme kick off from within government’s existing P15 billion note issuance programme. Under the programme, dating back to February 2011, the BoB auctions bonds and six-month treasury bills exclusively to commercial banks.  The latest developments, if successful, would open the door of the auctions to Batswana.  At present, government has issued out P10.2 billion of the note issuance programme, via quarterly auctions.