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NamWater raises N$200 million from its debut corporate bond

Helping state utility NamWater to float its first Corporate Bond are, from the left, NamWater’s Chief Financial Officer Cornwell Chadya, Group Managing Director of IJG Securities, Mark Späth, NamWater MD Dr Veino Shivute, Standard Bank Namibia’s Head of Corporate and Investment Banking Amit Mohan, and the bank’s new CEO Junius Mungunda.

The search for yield and the dire absence of a sufficient number of investment opportunities in the local market was amply demonstrated last week when state utility NamWater debut corporate bond was more than three times oversubscribed.

Namibia Water Corporation Limited (“NamWater”) successfully issued its first corporate bonds on the Namibian Stock Exchange on 24 April 2015. The issuance was supported by Standard Bank Namibia and IJG Securities who acted as joint lead arrangers, sponsor and rating advisors to NamWater.
NamWater initially hoped to raise between N$150million and N$200million, however due to an overwhelming positive response from the market, with total bids amounting to N$468million, a total of N$200million was allocated and issued to successful bidders. NamWater issued two bonds on the same day.
The first bond, designated NWC 20, has a maturity of five years. N$94 million was allocated to four bidders from 25 bids. N$304 was offered making the bond oversubscribed by a factor of 3.2. The bond is benchmarked to the South African R208 bond with a premium of 155 basis points.
The second bond, designated NWC 22, has a maturity of 7 years. N$106 million was allocated to nine bidders from 14 bids. N$164 million was offered making the bond one and a half times oversubscribed. The bond is benchmarked to the South African R2023 with a premium of 185 basis points.
“Through our active involvement in the Namibian capital market, Standard Bank Namibia and IJG Securities were well-positioned to assist NamWater with its Medium Term Note Programme and debut bond issuances” said Gaby van Eeden, Manager: Investment Banking at Standard Bank Namibia.
IJG Securities has extensive and proven capital market experience and has helped raise in excess of N$2.2 billion on the local bond market for issuers since 2000. Mark Späth, Group Managing Director of the IJG Group of Companies, said “the successful NamWater issue proves that there is an alternative financing and investment opportunity for both issuers and investors outside of government bonds, which further deepens the Namibian capital market.”
“In light of changing bank regulations, the capital markets offer a viable alternative to traditional funding mechanisms whilst providing an issuer with competitive funding costs and instrument flexibility,” said van Eeden.
In addition, Standard Bank Namibia’s Coverage Manager Nambata Angula said the success of NamWater’s Corporate Bond further aides in growing the existing domestic capital market in line with the Namibia Financial Sector Charter.
“This is a positive sign for the Namibian Capital Market and it is also a good way to raise funds or capital that will ultimately stimulate the financial markets,” said Angula.

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