Namibia Plans Bond Exchange to Lure Debt Sales From South Africa

WINDHOEK (Capital Markets in Africa) – Namibia plans to start a bond exchange to lure issuance by local companies that currently favour raising debt in its much larger neighbour, South Africa.

The southern African country’s corporate debt market of 5.8 billion Namibian dollars ($437 million) is dwarfed by South Africa’s 500 billion rand ($38 billion) of non-government bonds. The Namibian dollar is pegged at 1 South African rand. Corporate bonds in Namibia trade over-the-counter, with no standardized process or regulation, according to Bank Windhoek.

“Namibia’s corporate bond market is tiny compared to peers in the region,” Tiaan Bazuin, the chief executive officer at the Namibian Stock Exchange, said in an interview. “If we formalize the bond market, we can accommodate more players and drive up volumes at the exchange,” he said, without giving details of the time frame.

Banks and state-owned entities account for the bulk of corporate-debt issuance in Namibia, according to Bazuin. Most local companies choose to issue in South Africa, which has a more liquid market and deeper investor base.

Source: Bloomberg Business News