“These are the results of running a proper market” – BSE
Over P13.0 billion in Note Programmes approved
BBS, Letshego, Stanbic Bank have unlisted bonds of P665 million
Potential to list P30-37 billion in bonds
BSE reiterates centralising the bond market
Botswana Stock Exchange (BSE) says it is seeing increased interest from companies in neighboring countries willing to raise capital in Botswana’s bond market.
BSE CEO Thapelo Tsheole disclosed to a bond market conference that the bourse has already approved a US500 million bond by a Zambian company. “There is a Namibian company that is also coming very soon.”
In his view, “These are some of the results of running a proper market because we have been in competition with the JSE for a long time and we are making headway.”
In 2023 alone, more than P13.0 billion in Note Programmes have been approved, including a $500 million Programme from Zambia, according to Tsheole’s presentation. He revealed that the size of the Program Memorandum currently sits at P62 billion with the amount listed at P25 billion.
Programme memorandum is what companies usually want to issue. What companies normally do is they approach the BSE with an amount of how much they want to raise which will then be approved by the exchange. Subsequently, the companies would then issue several bonds under the programme memorandum. What is in the program memorandum is not what is listed but just an intention.
Tsheole revealed that they still have unlisted bonds by BBS, Letshego and Stanbic Bank at P665 million. “There is still a potential for this market to issue P30-37 billion in bonds.”
The value of bonds traded for this year is currently P1.7 billion. Market capitalisation for government bonds is P21.3 billion while corporate is P4.9 billion making total size P26.2 billion. In terms of diversity, Tsheole said “we are one of the few markets in Africa that have got a significant corporate issuance”.
Centralising the sweet pot of liquidity
“We still operate in what you call a hybrid model of trading where we have one level of trading in the market. The intention is to centralise the sweet pot of liquidity in terms of trading.”
The BSE has never shied away from talking about centralising the bond market and has said this to the government and the central bank.
“That is when you can see trading improving in the market.”
BSE has made presentations to SADC governors, ministers of finance and Tsheole said this was adopted as best practice at the SADC level.
“But unfortunately, other markets have adopted exactly what we have designed as the BSE but they were able to move faster in terms of implementation than us,” Tsheole lamented. In his view, the problem is not at the BSE but with other market players in the economy who are still resisting innovation and moving the market forward.
As he spoke, Namibia was launching theirs in terms of centralising its market.
“All we are saying is, at the BSE we want investors to be able to trade in government bonds through primary dealers using our state-of-the-art trading system because the current market ecosystem in architecture does not work for this market.”
Tsheole believes that is why the SADC committee of 14 governors agreed with the proposition the BSE put forward, including 14 finance ministers.”
“We can only do so much as the exchange. Market developments is an integrated agenda.”
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