Government is due back in the capital market on February 28, seeking P1.3 billion via the auction of a six-month treasury bill and three bonds, BusinessWeek has learnt.
The government, through Bank of Botswana (BoB), borrows quarterly from the local capital market mainly to develop the domestic market’s capacity, but also to fund gaps in the national budget.
For the 2019-2020 fiscal year, government’s projected deficit of P7.93 billion is being financed by drawdowns from the reserves managed by the BoB and quarterly borrowings from the capital market.
The auctions of government notes are exclusively attended by primary dealers, who comprise some banks for whom government treasury bills and bonds represent risk-free, lucrative investments.
Information from the central bank indicates that the February 28 auction will consist of a P500 million six-month treasury bill as well as P400 million under bond BW014, P300 million under bond BW013 and another P100 million under bond BW015.
The debt is being issued under government’s P15 billion domestic note issuance programme, which dates back to February 2011. The P1.3 billion government is seeking will add onto the P12.9 billion outstanding as its domestic debt as at Wednesday, a figure well within the 20% of GDP limit. The new and much-anticipated bond, BW016, previously revealed by finance ministry briefs, will not be part of the latest auction.
BW016 was expected to debut in the February 28 auction with a face value of P450 million. The upcoming auction is the last for this financial year.Besides their returns and use as a safe haven, government bonds are highly sought-after as vehicles to match long-term liabilities for financial sector players. The last auction, in November, raised P1.14 billion amidst aggressive bidding where bids reached P2.48 billion.