12 September 2017

Namibia: Development Bank Raises N$291 Million Through Bond

The Development Bank of Namibia (DBN) issued the first notes under its N$2.5 billion Medium-Term Note Programme last week and raised N$291 million.

The 3-year bond (series "DBN20") was issued through an oversubscribed auction process that was held on 31 August 2017. The bond pays a floating rate coupon quarterly, linked to the JIBAR rate and will mature on 4 September 2020.

The issue marks the first time that the Bank has formally approached local capital markets to raise funding, and depending on future cash flow requirements, the Bank will be a regular issuer in the Namibian capital markets going forward.

The N$2.5 billion Medium Term Note Programme aims to provide an alternative source of funding which forms part of the board approved funding strategy, in line with the bank's targeted gearing ratio.

"The programme is part of the Bank' strategy to diversify its source of funding and raise money on the market for on-lending to financially viable, environmental, and socially acceptable projects with developmental impact in line with the Bank's business plan. The Bank had planned to raise between N$200 million and N$ 300 million on its debut bond issue, and was well supported and oversubscribed by 26 staggered bids from 13 different investors both in Namibia and South Africa," said Jerome Mutumba, senior communications manager.

According to Mutumba, the total subscription amounted to N$428 million, and DBN issued a total amount of N$291 million at a spread of 190 basis points over the current JIBAR.

"DBN has been well capitalized over the years by its sole shareholder- the Government of the Republic of Namibia, but now recognises that it needs to leverage its unencumbered balance sheet. The Bank has also recently established a treasury function to manage its liquidity and funding needs, and is building an active presence in the Namibian money and capital markets in the realization of one of its core mandate," Mutumba added.

The Development Bank of Namibia obtained a Long-Term Issuer Default rating of BBB- and National scale rating of AAA(zaf) by Fitch ratings.

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