By: Nghiinomenwa Erastus
In one of the interesting stand-offs, investors are given option either to invest in government securities or MTC shares.
For the period of September 2021, to the end of November 2021, the government seeks to borrow N$7,3 billion through its borrowing instruments of bonds and treasury bills.
This is according to the Ministry of Finance Borrowing Strategy for the current financial year (2021/22), in its quest to fill the N$29,4 billion state funding gaps.
Interpreted differently, N$7,3 billion is an investment opportunity for those with savings and looking to invest.
On the other hand, MTC through their initial public offering has availed 367,5 million shares, seeking to raise N$3,1 billion from the same market and outside.
The amount to be raised will also go to the government because they are the only shareholder who is relinquishing the 49% equity in MTC.
The offering that was opened on 20 September 2021 gives the investors until 1 November to make up their minds whether to include MTC shares in their portfolios or not.
From September 2021 to the end of November, the government will borrow N$3,9 billion from the market through fixed-rate bonds, according to the borrowing strategy.
While through inflation-linked bonds with coupon rates that closely track inflation levels, the government will borrow N$900 million for the period in consideration.
Through short term instrument, treasury bills, the government plans to borrow N$2,4 billion during this period.
Treasury bills are used to ensure liquidity for the government and also for the market as money is not tied up for so long.
For the month of October 2021 specifically, the government plans to borrow six times through treasury bills using the combination of three, four, six, and nine-month treasury bills.
It also plans to borrow N$1,6 billion specifically through both fixed and inflation-linked bonds in October 2021.
October 2021 is also the same month given to local investors to gather their savings and re-adjust their portfolios for MTC investment who find it valuable to their asset basket.
Together with the MTC public offering, and government borrowing, give an investment opportunity of around N$10,4 billion in the period of three months.
This will make available a return and risk challenge to those planning to invest in the two asset classes.
The Villager did not do a comparison between MTC projected dividends and what the government is offering on its securities- this is due to different investment horizons and different features of the involved assets classes.
The government’s borrowing strategy and calendar are available on the Bank of Namibia website and the coupon offered.
While for the expected returns and risk associated with MTC shares as equities are available on the prospectus released by the company last week.
Email: erastus@thevillager.com.na
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