08 March 2018 | Ekonomie

BoN’s bond management matures

Panel discusses investment outlook

Ndama Nakashole - The Bank of Namibia (BoN) has evolved at a good pace in recent years in terms of managing its bonds. Also, the central bank is now consulting with the market, and it has improved transparency in this regard.

This was said by Stuart Main, the head of treasury funding at Nedbank Namibia, when a panel of experts discussed the outlook for Namibian bonds.

Themed ‘Investing in Namibian Bonds and Treasury Bills’, the panel discussion was part of an investment summit organised by Eljota Investment Managers in Windhoek on Tuesday.

“I have been in the industry for 13 years. And what I have been observing is that the central bank has evolved in many ways, including looking at the maturity profile better,” said Main.

Anthea Angermund from Prudential Portfolio Managers said investors interested in Namibian bonds kept their eyes on the government’s financial position. They would closely follow yesterday’s budget speech by finance minister Calle Schlettwein to see if they were willing to put their money in Namibian state coffers or not, she said.

Just like bonds granted to individuals, investors made sure that governments were able to repay the money, she said.

“The bond market checks how the government is rated by agencies and all those sort of things,” she said.

Angermund said the bond market was also concerned about inflation as another risk. She said very few bonds issued in Namibia were inflation linked.

Popular

Also on the panel was Capricorn Asset Management’s Ian Erlank, who agreed that while inflation was a risk for bond investors, the biggest concern was defaulting.

“That’s why we see bond participants don’t go on the longer curve. They go on a shorter curve because that is how assured they are, as far as liquidity is concerned,” he said of investing in local bonds.

He added that bonds had become a popular type of investment because the economy was not doing so well.

“This is because you, as an investor, already get that bond coupon at the beginning, and you also know from day one what your cash flow will look like,” he said.

“That’s why you see lower-risk investors are into bonds and higher-risk investors more into equity.”

The fourth panellist, IJG Securities head of research Eric van Zyl, touched on the question on government’s call for the repatriation of funds to the country.

“Because of the fact that government finances have been seeing a dip over the last 18 months to two years, any asset manager who will have to bring their money back into the country will reluctantly do so,” said Van Zyl.