Kgori Capital expects bond yields to flatten

Government is largely banking on its domestic borrowing programme to raise the billions of pula in budget deficits faced this year, but the returns or yields it has been offering investors have meant lower than targetted funds have been raised at all the monthly auctions of bonds dating back to last year. At the auctions held by the Bank of Botswana, the dealers compete to lend to the government by offering the yields they are seeking, with the BoB deciding the 'stop-out' yield or the level of interest it is willing to pay the dealers on particular securities on offer.

In a research note released this week, Kgori Capital portfolio manager, Kwabena Antwi said during the third quarter, pressure on government bonds had persisted as yields generally continued to rise across the curve.