Pioneer private sector bonds placed in SA capital market
The spreads are punishing but the trend is very positive. Earlier this week, First National Bank of Namibia announced it has successfully placed two rand-denominated bonds in the South African market, but at substantial spreads.
This acceptance of more Namibian instruments in the SA capital market bodes well for the government when it needs to access more funding from South Africa during the next two years.
In total, FNB Namibia issued more than N$1 billion in new bonds.
On Thursday FNB announced it has made issuances in the Windhoek market and for the first time in the South African market. “FNB Namibia, on 10 March 2017, established a new NAD/ZAR 5 billion medium term note programme approved by both the Johannesburg Securities Exchange and the Namibian Stock Exchange.”
FNB Namibia’s Treasurer, Michelle van Wyk said “under this programme, FNB Namibia successfully issued and listed its inaugural rand-denominated bonds with an aggregate amount of R677 million on the Johannesburg Stock Exchange, on Monday 20 March 2017.”
The bank only targeted R500 million but increased the total issuance when it became apparent that the South African market has a huge appetite for Namibian debt instruments. The issuance was one and a half times oversubscribed.
In Windhoek, FNB issued another two bonds for Tier 2 capital. Both bonds have a tenure of 10 years with an option to redeem after five years. These bonds were also one and a half times oversubscribed.
The two instruments issued in Johannesburg are a 3-year floating-rate bond at the Johannesburg Interbank agreed rate (JIBAR) plus 185 basis points, and a 5-year floating-rate bond at JIBAR plus 215 basis points.
The first Windhoek bond was placed at JIBAR plus 250 basis points and a fixed rate instrument at 10.36%. Both bonds together collected N$400 million for FNB Namibia.
FNB’s inaugural South African bonds hve proven demand for local debt in rand-denomination. This placement will enable all other institutions looking for capital – banks, parastatals, development agencies, and the government, to tap into the South African capital market, subject to demand and pricing.
The bookbuilder and manager is RMB Namibia.