Windhoek — The Namibian government last week on Wednesday secured an N$850 million ten-year bond on the Johannesburg Stock Exchange (JSE).
This transaction makes it the first time ever a sovereign country, other than South Africa, has secured a bond transaction listed on Africa’s biggest stock exchange.
The Minister of Finance, Saara Kuugongelwa-Amadhila, said the landmark transaction for the Common Monetary Area (CMA) forms part of government’s N$3 billion Medium-Term Note (MTN) programme on the JSE.
The bond, which is redeemable after 10 years, is priced at 8.26 per cent and was twice oversubscribed, which the finance minister said represents strong support and understanding of Namibia’s credit history from South African institutional investors.
“The South African capital markets have held a long standing appeal for issuers outside South Africa due to the favorable liquidity conditions and well developed capital markets,” said Minister Kuugongelwa-Amadhila.
Access to the South African capital and money markets for the CMA members countries (South Africa, Namibia, Lesotho and Swaziland) is already provided for in the CMA Multilateral Agreement.
This means that CMA governments and private entities are treated as local issuers in the South African market and the issued instruments are classified as domestic in that market.
As a domestic issuer, the Republic of Namibia is therefore subject to the same relevant financial laws and policies applicable to South Africa’s National Treasury and South Africa’s investors are allowed to freely invest in the instrument without restrictions.
“The Government of the Republic of Namibia also seeks to diversify its funding sources and to attract South African investors previously not taking part in the Namibian domestic debt markets. Having alternative funding sources becomes even more critical given the limited access to concessional funding following Namibia’s classification as an upper middle income country,” said the finance minister.
Both the South African and Namibian governments believe that this initiative will have positive effects to support regional economic development and promote regional integration in the CMA.
South Africa is Namibia’s biggest trade and Foreign Direct Investment partner. “This transaction is a natural step in deepening the economic and trade ties between the two major economies in the CMA,” added Kuugongelwa-Amadhila.
The bond on the JSE follows closely in the footsteps of Namibia’s award winning international US Dollar sovereign bond issue in 2011, in which Namibia raised US$500 million in 10 year bonds, marking the country’s first approach to international capital markets.