Corporate bonds cheer dull BSE debt market

The Botswana Stock Exchange (BSE) bond market has declined year-on-year although there was more activity in the corporate debt instruments. The BSE said on its market performance report up to the period ended June 30, 2016 that activity in the bond market has declined compared to the same period in 2015.

Data showed the value of bonds traded over the period under review was P59.0 million in comparison to P664.6 million traded over the same period in 2015.

Mr. Thapelo Tsheole, BSE CEO
Mr. Thapelo Tsheole, BSE CEO

“On the brighter side, corporate bonds traded more than Government bonds on a year-to-date period basis,” said the exchange headed by CEO Thapelo Tsheole. “This is an improvement as no corporate bonds trades were executed in the whole of 2015”.

During the period, the BSE noted that Bank of Botswana, on behalf of government, held two bond auctions during the period under review. In the bond auction on 4 March, additional tranches of the BW005 (P50 Mn), BW007 (P87 Mn), BW008 (P100 Mn), BW011 (P150 Mn) and BW012 (P100 Mn) bonds and a Treasury Bill of P500 Mn were offered. All of these tranches were oversubscribed and fully allotted.

“At the 3 June Government bond auction, during which P907 Mn was raised, four bonds were reopened and a P500 Mn Treasury Bill was issued. The bonds reopened were BW005 (P100 Mn allotted), BW007 (P99 Mn allotted), BW008 (P108 Mn allotted) and BW012 (P100 Mn allotted).”

According to BSE, the second quarter of 2016 saw the issuance and subsequent listing of 3 corporate bonds. These were Botswana Development Corporation’s BDC001 (P225.26 Mn) and 2 bonds issued by PrimeTime being PTP021 (P56 Mn) and PTP (49 Mn). On the back of the government bond auctions and new corporate bond issuances, the market capitalisation of BSE listed bonds increased to P11.3 Bn compared to P10.5 Bn in same period in 2015.

The BSE said it has come up with several strategies to try and address constraints affecting bond market development. One of the strategies is a Bond Market Conference, which is also an initiative to promote the visibility of the Botswana Bond Market Association (BBMA).

The conference is being organised by both the BSE and BBMA and is scheduled to be held on October 6, 2016 under the theme “The Bond Market – A Pillar of the Economy”.

The conference seeks to bring together stakeholders and participants in the bond market to engage in discussions on topical issues including the building blocks of a robust bond market, opportunities for infrastructure funding through the bond market, promoting an efficient regulatory environment, efficiency and liquidity of the secondary market, among others.

Furthermore, this will be an opportunity to nurture relationships between domestic and international stakeholders in the bond market for purposes of capacity building, benchmarking and harmonisation of debt market related developmental strategies.

The conference is targeted at all sectors and participants in the bond market. This includes fund managers, issuers, regulators and rating agencies, among others. The event is expected to attract over 200 delegates from Botswana and from across the continent.

Exchange Traded Funds

According to the BSE, during the first half of 2016 activity on the Exchange Traded Funds (ETFs) market was relatively reduced compared to the same period in 2015. The volume of ETF units traded was 440,946 in 2016 while the turnover registered was P58.1 Mn. Over the same period in 2015, the number of units traded amounted to 8.8 Mn yielding a turnover of P434.7 Mn.

“To promote visibility and education about ETFs, the BSE initiated a newspaper educational column in May 2016 called “ETF Watch – Investing in Exchange Traded Funds”. The column promotes awareness about ETFs by providing analysis about the functioning and creation of ETFs, analysis of their performance and providing insights about how ETFs can be used to add value to investor portfolios. The articles are published on The Botswana Guardian and The Business Weekly & Review newspapers every month until the end of 2016.