Chamwe Kaira
The Bank of Namibia (BoN) was scheduled to return to the market on Thursday with a treasury bill auction totalling N$1.51 billion across the 91-, 182-, 273- and 364-day maturities.
According to Simonis Storm, system liquidity rose slightly to N$5.3 billion from N$5.2 billion at the previous auction.
“This suggests a modest reduction in incremental funding capacity among banks, which could slightly temper participation at the margin. Namibia’s position liquidity, however, declined more sharply to N$569 million from N$1 billion previously,” Simonis Storm said.
Despite the drop in position liquidity, recent auction results show that overall conditions remain supportive.
Market participants continue to have enough balance-sheet capacity to absorb new government issuance.
The previous Treasury bill auction attracted bids of N$2.7 billion, up from N$2.3 billion at the prior auction.
Demand strengthened, with oversubscription levels remaining firm.
Interest was strongest in the 364-day bill, which drew N$1.1 billion in bids.
This accounted for about 41% of total demand and resulted in a bid-to-cover ratio of 2.64 times. The 273-day bill received N$740 million in bids, or about 27% of total demand, with a bid-to-cover ratio of 1.87 times.
The 182-day bill attracted N$506 million in bids, around 19% of the total, and recorded a bid-to-cover ratio of 1.30 times. The 91-day bill drew N$351 million in bids, representing roughly 13% of demand, with a bid-to-cover ratio of 1.00 times.
Simonis Storm said global and regional monetary policy developments remain in focus as investors await signals from major central banks while Namibia prepares to raise fresh funding in the domestic market.
In the United States, the Federal Reserve is widely expected to keep the federal funds rate unchanged at between 3.50% and 3.75%.
The policy statement is the focus of the market, seeking clues about the future path of interest rates.
In South Africa, expectations are growing that the South African Reserve Bank will cut interest rates at its next meeting.
This expectation is already reflected in market pricing, with South African Treasury bill yields falling by an average of about 20 basis points since the last meeting.
“Namibia continues to offer more attractive Treasury bill yields than South Africa across all comparable maturities. Yield differentials between South African and Namibian Treasury bills stood at minus 60 basis points for three-month bills, minus 47 basis points for six-month bills, minus 45 basis points for nine-month bills and minus 42 basis points for 12-month bills, favouring Namibia across the curve.”
