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One more simple switch auction, one more step to bring substantial relief to government finances

One more simple switch auction, one more step to bring substantial relief to government finances

On Wednesday, the Bank of Namibia conducted another highly successful so-called switch auction on behalf of the Ministry of Finance, relieving the government’s short-term liabilities by nearly one billion dollars, in a single day.

Switch auctions offer existing bondholders the opportunity to move their asset’s maturity out to a number of designated bonds with longer maturities at rates determined by investors through the open auction mechanism. All transaction are completely transparent, following exactly the same principles and rules as with a new issuance.

The success of the previous switch auction prompted the ministry to continue using this avenue to change its debt maturity profile. And as with the previous auction, the offer was oversubscribed signalling, first, the market’s willingness to change the maturity of their bond assets, and second, underscoring the credibility the Ministry of Finance has established with switch auctions with the stated intention to change the debt profile.

The not-insignificant amount of N$973 million was rolled over into eight bonds with longer maturities, from the more popular GC23 to the relatively new GC45, some 26 years in the future. Were the auction not successful or substantially undersubscribed, this nearly one billion dollars, or a large portion of it, would have become due on 15 April next year. Needless to say, given the current course of debt consolidation and pro-active strategies to improve the government’s cashflow, having to fork out a cool billion next April will put a serious dent in the strategy’s outcome.

Another confirmation of the ministry’s confidence to relieve pressure on short-term liabilities and eventually to extend the debt maturity profile out to thirty years, is the date of the auction. This auction was done eleven months before the GC20’s due date, giving bond holders ample time to consider their own portfolios and to restructure their assets.

As is usually the case, many interesting aspects around local liquidity, investor confidence and public debt management are revealed in the detail.

The offer was spread over eight lots ranging from N$50 million to N$187 million. The first two, GC23 and GC27 proved to be the most popular, as can be expected. These two bids were oversubscribed by 2.4 and 2.1 times respectively. For instance, for the N$123 million the ministry wanted to switch to GC23, investors offered a solid N$299 million in a total of 15 bids. This immediately shows that the shorter-dated instruments are more popular, especially as they tie in comfortably with banks’ investment profiles which are typically limited to 60 months.

GC27, for which only N$103 million was offered, received seven bids to the total value of N$223 million, reflecting reduced appetite the moment maturities are longer. This is corroborated by the subscription rates for the other six instruments. None of them was undersubscribed but all received bids only for the nominal amounts except GC35 and GC37 which were marginally oversubscribed.

In the end, taken all bids into consideration, the total nominal amount was oversubscribed by only 1.3 times but this does not distract from the obvious popularity of the shorter bonds, and of the support in the market for longer dated instruments.

I bet if a similar auction was held in the first quarter of 2017, appetite would have been much less, if there were any at all. The results of the switch auction confirms to me that the government debt consolidation course has been accepted by the market, and, most important, that the private sector’s willingness to continue participating in the capital market, is confirmed.

On Thursday the finance minister took time to explain the nitty gritty of the government’s debt profile and its obligations. Although he did not say so, I sensed he was confident with the figures he presented, perhaps emboldened in no small measure by the success of the auction he held a day earlier.


About The Author

Daniel Steinmann

Brief CV of Daniel Steinmann. Born 24 February 1961, Johannesburg. Educated at the University of Pretoria: BA, BA(hons), BD. Postgraduate degrees are in Philosophy and Divinity. Editor of the Namibia Economist since 1991. Daniel Steinmann has steered the Economist as editor for the past 29 years. The Economist started as a monthly free-sheet, then moved to a weekly paper edition (1996 to 2016), and on 01 December 2016 to a daily digital newspaper at It is the first Namibian newspaper to go fully digital. Daniel Steinmann is an authority on macro-economics having established a sound record of budget analysis, strategic planning and assessing the impact of policy formulation. For eight years, he hosted a weekly talk-show on NBC Radio, explaining complex economic concepts to a lay audience in a relaxed, conversational manner. He was a founding member of the Editors' Forum of Namibia. Over the years, he has mentored hundreds of journalism students as interns and as young professional jourlists. He regularly helps economics students, both graduate and post-graduate, to prepare for examinations and moderator reviews. He is the Namibian respondent for the World Economic Survey conducted every quarter for the Ifo Center for Business Cycle Analysis and Surveys at the University of Munich in Germany. He is frequently consulted by NGOs and international analysts on local economic trends and developments. Send comments to

Following reverse listing, public can now acquire shareholding in Paratus Namibia


20 February 2020, Windhoek, Namibia: Paratus Namibia Holdings (PNH) was founded as Nimbus Infrastructure Limited (“Nimbus”), Namibia’s first Capital Pool Company listed on the Namibian Stock Exchange (“NSX”).

Although targeting an initial capital raising of N$300 million, Nimbus nonetheless managed to secure funding to the value of N$98 million through its CPC listing. With a mandate to invest in ICT infrastructure in sub-Sahara Africa, it concluded management agreements with financial partner Cirrus and technology partner, Paratus Telecommunications (Pty) Ltd (“Paratus Namibia”).

Paratus Namibia Managing Director, Andrew Hall

Its first investment was placed in Paratus Namibia, a fully licensed communications operator in Namibia under regulation of the Communications Regulatory Authority of Namibia (CRAN). Nimbus has since been able to increase its capital asset base to close to N$500 million over the past two years.

In order to streamline further investment and to avoid duplicating potential ICT projects in the market between Nimbus and Paratus Namibia, it was decided to consolidate the operations.

Publishing various circulars to shareholders, Nimbus took up a 100% shareholding stake in Paratus Namibia in 2019 and proceeded to apply to have its name changed to Paratus Namibia Holdings with a consolidated board structure to ensure streamlined operations between the capital holdings and the operational arm of the business.

This transaction was approved by the Competitions Commission as well as CRAN, following all the relevant regulatory approvals as well as the necessary requirements in terms of corporate governance structures.

Paratus Namibia has evolved as a fully comprehensive communications operator in Namibia and operates as the head office of the Paratus Group in Africa. Paratus has established a pan-African footprint with operations in six African countries, being: Angola, Botswana, Mozambique, Namibia, South Africa and Zambia.

The group has achieved many successes over the years of which more recently includes the building of the Trans-Kalahari Fibre (TKF) project, which connects from the West Africa Cable System (WACS) eastward through Namibia to Botswana and onward to Johannesburg. The TKF also extends northward through Zambia to connect to Dar es Salaam in Tanzania, which made Paratus the first operator to connect the west and east coast of Africa under one Autonomous System Number (ASN).

This means that Paratus is now “exporting” internet capacity to landlocked countries such as Zambia, Botswana, the DRC with more countries to be targeted, and through its extensive African network, Paratus is well-positioned to expand the network even further into emerging ICT territories.

PNH as a fully-listed entity on the NSX, is therefore now the 100% shareholder of Paratus Namibia thereby becoming a public company. PNH is ready to invest in the future of the ICT environment in Namibia. The public is therefore invited and welcome to acquire shares in Paratus Namibia Holdings by speaking to a local stockbroker registered with the NSX. The future is bright, and the opportunities are endless.