Gov’t raises P900m debt

Government, through the Bank of Botswana (BoB), last week raised P902 million of the P2 billion it was seeking from the capital market, through the auction of treasury bills and bonds. Data from the central bank indicates that the recent higher allocation of funds seen at the auction in January, where government raised 98.5% of the debt it was seeking, did not continue to the February offering, with just 45.1% raised. At last week’s auction, the BoB rejected all eight bids for the P200 million offered under the bond maturing in 2027. Just over 90% of the funds raised in the auction were from the two treasury bills offered, with analysts at African Alliance saying this “showcased a preference to short-term financing” by bidders. The bonds on offer only raised P87 million out of the P500 million on offer, despite generally being oversubscribed meaning bids exceeded the amounts on offer. The trend, analysts have said, is indicative of the BoB rejecting demands for higher yields by bidders. Yields rose throughout 2021 fuelled by the sovereign credit downgrade, expectations of higher inflation and competing returns from the South African market, meaning higher borrowing costs for government. Market watchers have said they expect yields to stabilise as government and the capital market reach a balance on the cost of funding. On behalf of government, the BoB holds monthly auctions of treasury bills and bonds to raise debt funding under the P30 billion domestic issuance programme authorised by Parliament in September 2020.