Botswana┬áHousing Corporation (BHC), the┬ágiant government underpinned property development┬ácompany,┬áis to power the┬álocal┬ácapital market with two bonds┬áthat┬áwere overwhelmingly┬áreceived┬áat a time when the market is in a silly period.
The two bonds BHC 020 and┬áBHC 017┬áworth┬áP 300 million┬áin total┬áwill be listed on the Botswana Stock Exchange (BSE)┬átomorrow (Monday) and are part of┬áthe P2 billion┬á programme┬áaimed at┬ásecuring┬áfuture funding needs for the organisation.
The latest development will come with the trail-blazing development on the BSE since one of the bonds will provide a┬áfloating rateÔÇöthat even beats the Bank of Botswana┬á Certificates (Bobcs).
The┬áshort term┬áfloating note BHC 017┬áattracted sensational interest from investors as it got┬áoversubscribed by nearly┬á200 percent while the long term 10-year fixed┬ábond, BHC 020 mutely┬árose by 115 percent.
The BHC 017 bond ÔÇô the floating bond┬ápegged against the Bank of Botswana Certificates (Bobcs)ÔÇö worth P 150 million┬áattracted a lot of┬áappetite┬áas it┬áwas┬á191┬ápercent┬á oversubscribed or┬áhit┬á P286┬á million in terms of subscription.┬á
The bond┬áwill pay dividend on┬á91 days at a rate of┬á170 basis points┬áabove the Bobcs rate.
The┬ámove┬áwill mean that the┬á BHC┬ábecome the┬á darling of┬á punters┬áon the short term savings┬áas it┬á beats the BobcsÔÇöwhich has become the cash cow of the top local commercial banks. However, BHC 017 shortfall is that it is small in terms of value┬ábut┬áits benefits are widely┬áspread┬ábecause it is not geared to a specific┬áclub of market players.┬á
Further, BHC 017 still has a balance of P286 million┬áto be issued┬áat a later date under┬áthe same tranche.
Meanwhile, BHC 020 bond┬átranche┬áwith┬áa 10 year maturity, which┬áwas earmarked to raise┬áP 150 million, was┬á115 percent up as it netted┬áP 173 million in terms of subscription.
The bond┬áis priced at 10.1 percent to maturity and is left with a balance┬áof P 103 million┬áto be┬áissued at a later date.
BHC,┬áwhich is into property development, renting and selling,┬áresorted to the┬áidea of breathing life into the┬ádomestic capital markets after a grilling┬áattack in the past┬áwhen it resorted to borrowing money cheap┬áfrom China.
The move offended market commentators because┬áit excluded┬á the local┬ápension funds, insurance companies and other players that┬á are┬áawash with cash, looking for investment homes.
Another controversy with the Chinese money was that it came┬áwith some strings attached; that meant that only Chinese companies┬ácould tender for BHC’s┬ámulti- million┬áconstruction projects.