WINDHOEK, Sept. 11 – The Development Bank of Namibia (DBN) issued the first notes under its N$ 2.5 billion Medium-Term Note Programme on Tuesday 5 September and raised a total amount of N$ 291 million.
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 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 Namibian 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. This is indeed a momentous occasion for the Bank which signaled market confidence in the Bank.
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.
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.
The Development Bank of Namibia’s 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.
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.
The Development Bank of Namibia obtained a Long-Term Issuer Default rating of BBB- and National scale rating of AAA(zaf) by Fitch ratings.
This rating is equal to the sovereign (Government of the Republic of Namibia). – NDN Staffer