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GOVT ISSUES ANOTHER E150M INFRASTRUCTURE BOND

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MBABANE – Government has presented yet another E150 million investment opportunity through issuing an infrastructure bond.

On behalf of the State, the Central Bank of Swaziland (CBS) has announced an eight-year infrastructure bond. The coupon rate for the bond will be fixed at 9.75 per cent and the auction date will be May 28, 2018 and the settlement date will be May 31, 2018. “The bond will be issued by competitive multiple bid auction and is open to the public including individuals, corporate and institutional investors. All investors should apply through primary dealers who are the four local commercial banks,” CBS announced. The four commercial banks in the Kingdom of Eswatini are: Standard Bank, FNB, SwaziBank and Swaziland Building Society (SBS). It was mentioned that the purpose of the issuance of the bond was to raise finance capital for infrastructure projects which seek to stimulate economic, business and social development.

CBS explained that the minimum bid size would be E10 000 for individual non-competitive bidders and E1 million for institutional investors. The interest payment date was reported to be November 30 and May 31 in each year while the redemption date will be May 31, 2026.

Obligations

“Successful bidders who fail to honour their obligations on time will be disqualified from participating in one subsequent bond auction,” warned CBS. Recently, government’s E150 million infrastructure bond raked in over E160 million. 
This was after CBS auctioned a 10-year floating coupon rate infrastructure bond on behalf of government. The auction was held on March 26, 2018 settling on 29 March 2018. The bond matures in March 29, 2028. The coupon rate was set at prime minus 50 basis points (currently 10 per cent) per-annum payable semi-annual. CBS Governor Majozi Sithole reported that total bids received amounted to E168.4 million resulting in a bid-cover ratio of 112.3 per cent.
“Of the bids received, E168 million was competitive whilst E0.4 million was on the non-competitive category.

Competitive

‘‘Total bids allotted amounted to E130.4 million resulting to an allotment ratio of 87 per cent; of which the full competitive bids amount of E130 million was allotted to NBFIs (Non-Bank Financial Institutions with the remaining E0.4 million allotted to individuals,” said Sithole. The governor said while commercial banks continued to dominate participation in government securities on the shorter end of the yield curve, non-bank financial institutions dominate on the longer term securities. The results presented by CBS followed a trend where another government E150 million bond was also over-subscribed by slightly above E47 million.

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