CHAMWE KAIRA
Over the next three years, a significant portion of the government debt portfolio is due for repayment. The largest among these maturities is the US$750 million (N$14.3 billion) Eurobond due on 29 October 2025.
The Ministry of Finance and Public Enterprises has said this is the largest single day debt maturity in the
history of the country.
In this regard, the government plans to redirect part of the increase in revenues towards the sinking fund to manage the rollover risk and contain increases in future debt service obligations.
Accordingly, the government will transmit at least N$3.5 billion during 2024/25 financial year and some N$2 billion in 2025/26 financial year of the SACU receipts to the sinking fund to place us in a better position to retire two-thirds of the Eurobond (US$500 million) at maturity.
“Consequently, the remaining one-third of the bond (US$250 million) will be refinanced utilising the most cost-effective instrument in the next financial year,” the ministry said.
From a financing perspective, about 80% of the financing requirement over the next three years will be sourced from the domestic markets, in line with the broader sovereign debt management strategy. To smooth the redemption profile over the MTEF period, government plan to deploy various strategies aimed at managing debt obligations, this include bond switches were government will continue to offer switch auctions to investors interested to switch from the maturing domestic bonds to longer dated bond, rollover auctions were the government will provide an opportunity to roll over the maturing bonds into medium to longer date bonds at maturity and sinking funds were the government has maintained the routine of channelling funds to the two sinking funds, namely the rand sinking fund (Internal Registered Stock redemption Account) and the USD sinking fund.
“These sinking funds are utilised to redeem maturing debt instruments in the domestic market and international market. Thus far, government has accumulated N$4.2 billion or USD218 million in both sinking funds for the purpose of bond redemption,” the ministry said.
