A conference on securitisation in the third quarter of 2008 to deliberate on strategies to help the debt market to become more active and liquid is being considered for the third quarter of 2008 by the Botswana Stock Exchange.
Plans for the 'securitisation' conference are revealed in the 2007 Annual Report of the BSE in which the CEO of the bourse, Hiran Mendis, says the debt market in Botswana is generally inactive and that liquidity has been extremely low despite high demand for debt instruments.The report says bond issues on the BSE have been over-subscribed in the past few years. It cites the recently concluded government bond offer, which it says was over subscribed by 500 percent.
The report says the main focus of securitisation is to encourage banks and other financial institutions to structure securities, utilising otherwise liquid assets, which can be listed and traded on the BSE.Securitisation assets could include residential mortgages, automobile loans, credit card receivables, leases and any other conceivable financial asset.The BSE first made presentations on securitisation to the National Development Bank and at a Capital Securities-sponsored financial sector conference last year."In developing the securitisation market in Botswana, the BSE has taken cognisance of the importance of rating agencies to the securitisation process," Mendis says.
Discussions have been held with a credit rating agency with a view to making it possible for local companies to be rated at a reasonable cost, the BSE annual report discloses.
During the listing of Stanbic
During the year under review there were 26 bonds listed on the BSE, but the debt market still remained inactive as in previous years.
The value of debt securities traded in 2007 was P196.8 million and the debt market capitalisation declined from P4.1 billion as at the end of 2006 to P3.8 billion as at end of 2007.In its report, the BSE says it intends to redouble its efforts to create awareness of the advantages of listing among companies.
But this objective would be difficult to achieve by merely concentrating in the private sector because Botswana's private sector is both comparatively small and young.But more challenging is the fact that Government and parastatals account for a significant proportion of economic activity in the country, the report notes.The BSE hopes the implementation of Government's privatisation strategy will influence potential for listing."It is noted that privatisations have played the anchor role in the development of capital markets in a number of developing economies where such privatisations have been done using capital markets," the report says.