Botswana’s capital market is unlikely to witness a historic multilateral lenders’ bond listing in the near future after talks with authorities failed to bear fruits, at-least for now.
International Finance Corporation (IFC), a private arm of World Bank, announced last August it would list local currency bonds in several African countries including Botswana. “We have held talks with them (IFC officials), but we have not concluded anything much,” said deputy chief executive officer Botswana Stock Exchange (BSE) Thapelo Tsheole. He was responding to Botswana Guardian questions after the launch of the Central African Stock Exchanges handbook for 2014 this week.
Tsheole did not reveal details of the meetings with the IFC officials, or why he is less confident about their maiden listing in the country. The pan-Africa Domestic Medium Term Bond programme by IFC was launched to boost Africa’s debt market. Money raised from such listing was to be used to fund domestic economies, IFC officials have promised.
Last year, IFC said it was in talks with relevant authorities in Botswana about the listing, without giving details. Botswana Guardian was unable to establish if IFC was still interested in floating bonds in the country. “Surprisingly, they (IFC) have listed bonds in markets which I think we are performing better than them,” said Tsheole. Towards the end of last year, the US-based corporation debuted a $24 million bond in Lusaka Stock Exchange (LSE).
The bonds were 4.8 times oversubscribed. Africa may become the IFC’s biggest portfolio by 2016, chief risk officer Saadia Khairi told Bloomberg. Botswana’s domestic bond market is dominated by government agencies. Government’s P15 billion domestic bond programme is coming up slowly. Meanwhile, the local bond market is expected to see yields rising in the foreseeable future, a leading asset manager has said.
“We are at the bottom of the interest rate cycle and we should start seeing yields rising in the latter part of the year,” said African Alliance Asset Management in its latest monthly ‘Market Watch’ publication. Bonds yields rose marginally by 0,41 percent last month.