At present, the BSE hosts 11 government and quasi-government bonds and 23 corporate bonds from entities such as the Botswana Housing Corporation, Water Utilities Corporation and several local banks.BSE officials told Mmegi Business that the Bond Index would comprise two separate indices for government and corporate bonds and a composite index consisting of both types of bonds."A bond index would provide a benchmark for portfolio managers to determine portfolio returns relative to the movement in the index," officials said in a statement yesterday."It would also form the basis for designing bond index funds and other such products. The bond index could also be used by investors to judge and objectively choose between investing in alternative debt funds."
Officials from Nedbank Capital, the BSE's chosen partner in developing the bond index, were in Gaborone from Tuesday to fine-tune the ground-breaking instrument. Nedbank head of Beta Solutions, Nerina Visser, said the bond index had been handed over to the BSE."We have handed it over to the BSE and they will run it independently, when they launch it," she said.Visser revealed that the index was the result of an extensive consultative effort through most of last year involving various market participants and regulators such as the Bank of Botswana and the Non-Bank Financial Institutions Regulatory Authority (NBFIRA).One of the key outcomes of the consultation is that due to the local bond market's traditional illiquidity, the bond index will not be based on traded prices, but rather fair value.
