Botswana Post lists bond next year

Botswana Post is planning to issue a multi-million Pula bond in the local bourse early next year, according to sources at the quasi-government institution. This follows a successful application to the Ministry of Transport and Communications. The request to raise cash was made in 2010, but bureaucrats at the ministry took long to act on the proposal. Meanwhile, details of the value of the bond remain a closely guarded secret among executives at Poso House.

Chief Executive, Pele Moleta has only confirmed that Botswana Post is in the process of listing the bond.’ In the past, the company explained part of that the capital raised from the bond would be used to refurbish Poso House. The building has since been refurbished which raises fresh speculations why Botswana Post is planning to raise more capital. Moleta said they want to make the bond a success. “We want to ensure we get the best rate. There is no reason to rush the listing if we don’t get the best rate,” said Moleta, also former banker with the First National Bank of Botswana. He mentioned that meetings have been held with ‘relevant people’ ahead of listing, possibly in the first quarter of 2013.

It was not clear at press time if Botswana Post has been given the green light from Botswana Stock Exchange (BSE), the regulator of the bond market in the country. In the last three years, Botswana Post, the state owned postal services provider has been experiencing poor cash flow. It remains to be seen if the nascent capital market in Botswana will warmly welcome the bond. Speaking to BG Business on Tuesday, a market analyst from Motswedi Securities said ‘chances’ are that the bond will be ‘overwhelmingly supported.’

“Historically the debt market has been supportive of the local parastatals,” explained Garry Juma. He cited the recent BVI bond as one example of a successful bond issuance. In the past, other state agencies such as Botswana Development Corporation (BDC), Botswana Vaccine Institute and Botswana Building Society (BBS) listed bonds at Botswana Stock Exchange (BSE). BBS, a leading property loan provider has announced plans to list a P2 billion in tranches, but they have since halted for unclear reasons. In recent years, government has also been supportive of the nascent bond market.

BSE Chief Executive Hiran Mendis has in the past raised concerns that the bond market in Botswana has been growing at a rather slow pace as compared to other economies. As at mid November 2012, Botswana’s debt market turnover was P300 million compared to P325.1 million and a record P757.7 million in 2011 and 2010 respectively.

To show commitment, government has launched a P15 billion bond programme to part fund the budget. In fact Minister of Finance and Development Planning Kenneth Matambo told parliament early this year that they would raise more cash in the bond market, as well as supporting the industry

Last modified on Wednesday, 31 July 2013 16:21

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