Govt returns to market, seeks to borrow P1.25bn

New broom:New Finance Minister,Thapelo Matshekais onthe look out for funds
New broom:New Finance Minister,Thapelo Matshekais onthe look out for funds

Government returns to the capital market on November 29 looking to borrow P1.25 billion via the auction of a treasury bill and three bonds, BusinessWeek has learnt.

The government, through Bank of Botswana, borrows quarterly from the local capital market mainly to develop the local market’s capacity, but also to fund gaps in the national budget.

The auctions of government notes are exclusively attended by primary dealers, who comprise some banks. The government paper represents risk free, solid returns for investment.

Information from the central bank indicates that the November 29 auction will consist of a P500 million six-month treasury bill as well as P350 million under bond BW014, P200 million under bond BW007 and another P200 million under bond BW012.

The debt is being issued under government’s P15 billion domestic note issuance programme, which dates back to February 2011.

A new and much-anticipated bond, BW016 will not be part of the latest auction and is now expected to debut at the last auction of the fiscal year in March 2020. Previously published briefs from the Ministry of Finance and Economic Development indicated that BW016 with a face value of P450 million would debut in one of the auctions this fiscal year.

Government bonds are also highly sought-after vehicles used to match long-term liabilities for financial sector players. Each auction is generally met with strong interest by the local market, as evidenced by high bid to cover ratios, a calculation used to express the demand for a particular security during offerings and auctions.

Thus far this fiscal year, government has raised about P2 billion in auctions of its notes.

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