The government is expected to be in a cap in hand situation to the domestic markets as it tries to stitch its P12.6 billion to meet its financing requirement for the 2023/2024 financial year.
The financing of the deficit will be done through an assortment of measures that include the auctioning of the treasury bill commonly known as Bank of Botswana Certificates to the tune of P 879 million and short-dated government bonds to the tune of P 2 billion.
The treasury bills are currently priced at 2.65 percent.
Further, government is still trying to put up a structure for the P 3 billion long -dated and inflation linked bonds that is likely to come to the market either later or early next year.
“The overall split issuance by maturity is likely to be affected by the MoF (Ministry of Finance) issuance decision -year, taking into account market feedback,” the Ministry said.
The short- dates and the long- dates government bonds will split in eight auction and 10 auctions, respectively. It is expected that the coupon rate and the yield will be influenced by a raft of factors such as inflation and bidders’ appetite.
New foreign borrowing of P 5.5 billion is also on the cards– bringing the total to P 11.4 billion—leaving government with a shortfall of P1.2 billion.
The move will leave government just P2.5 billion shy from the its P 30 billion spending celling that was determined by parliament some few years ago. Presently, there are eight government bonds on the market with nominal value of P 20 billion.
BOTSGO623, which has nominal value of P 2.69 billion with a coupon rate of 4.5 percent and a yield of 4.98 percent, is to mature this month.
The government’s borrowing strategy that was unveiled on Wednesday has been applauded by financial pundits saying it brings transparency and predictability to the market.
“What is more interesting is that government is leaning more on domestic borrowing as opposed to foreign borrowing,” managing director at Kgori Capital, Alphonse Ndzinge said.