16 May 2025
Analysts urge caution as global bond volatility and upcoming Eurobond maturity expose Namibia’s growing reliance on domestic markets and foreign-currency risk.
The Namibian government is considering issuing a new Eurobond or securing a syndicated loan facility in 2026, a move that has prompted warnings from analysts concerned about the country's growing exposure to foreign-currency debt and heightened volatility in global bond markets.
Simonis Storm Securities cautioned that any external borrowing must be timed carefully and supported by a clear fiscal consolidation plan.
“Investor appetite will not be guaranteed, and we’ve seen risk premiums widen fast across similarly rated sovereigns,” the firm said.
Namibia has shifted increasingly toward domestic borrowing in recent years. In the 2020/21 fiscal year, local sources accounted for about 60% of the government’s total funding needs. By 2025/26, that share is projected to exceed 71%.
“This is not incidental. It reflects rising debt obligations, constrained access to concessional capital, and the high cost of foreign funding in a globally volatile rate environment. Domestic markets have become the core engine of Namibia’s fiscal operations,” Simonis said.
In 2023/24, total gross borrowing reached N$10.1 billion, with N$7.4 billion—approximately 73%—raised on the domestic market. The government relied on mid-curve fixed-rate bonds, such as GC28, GC32, GC35, and GC40, aiming to manage liquidity and cater to investor demand.
Borrowing needs for 2024/25 rose to N$15.3 billion, with N$12.8 billion—nearly 84%—expected to come from domestic sources. For 2025/26, domestic borrowing is projected to reach a record high of N$21.2 billion.
“GC35 to GC50 completely dominate the auction calendar. The strategy is clear: reduce rollover risk, extend average maturity, and stabilise the debt profile. But every benefit comes with a cost,” Simonis noted.
The firm warned of signs of absorption fatigue among local institutional investors, including pension funds, insurers, and commercial banks, who are becoming saturated with government securities.
Externally, concessional funding remains limited. Namibia secured about N$2.7 billion from lenders such as the African Development Bank and Germany’s KfW in 2023/24. That figure declined slightly to N$2.4 billion in 2024/25 but is expected to jump to N$8.6 billion in 2025/26.
The increase is largely attributed to the upcoming maturity of a US$750 million Eurobond issued in 2015, due in October 2025. To prepare for repayment, the government has accumulated a US$463 million sinking fund and plans to add N$3 billion—around US$160 million—this year. However, a funding gap of US$125 million to US$150 million remains.
“How the deficit is covered will matter. Drawing reserves in a weak currency environment could significantly increase the foreign exchange risk. If the state seeks short-term external refinancing, pricing will depend heavily on Namibia’s rating, capital market sentiment, and the global yield curve in early 2026. Either way, this Eurobond is not just a debt maturity. It’s a stress test for Namibia’s external liquidity framework,” Simonis said.