NAMIBIA PAYS US$750 MILLION EUROBOND IN ONE DAY

By: Africa news agency

Photo: The Voice of Africa

Namibia has successfully repaid its Eurobond, the nation’s largest loan, valued at US$750 million, equivalent to approximately N$12.8 billion. This milestone was announced by Ericah Shafudah, Minister of Finance, during her ministerial statement in Parliament. She emphasised that it represents the largest single-day debt repayment in Namibian history, underscoring the government’s commitment to prudent financial management.

“By paying off this debt, we have shown the world that Namibia is trustworthy and can manage its finances well. This helps to keep our economy strong and protects us from sudden fluctuations in the global market,” Shafudah said.

The minister explained that a Eurobond is a financial instrument that allows middle-income countries to raise funds from international capital markets, typically denominated in U.S. dollars and structured for gradual repayment.
She recalled that Namibia issued its first Eurobond in 2011 for US$500 million (approximately N$7.5 billion) at an interest rate of 5.5%. She revealed that the funds were allocated to support initiatives including the National Housing Enterprise and other development goals, and that the bond was successfully redeemed in November 2021.
The minister further pointed out that Namibia entered the international capital markets for a second time in 2015, with the issuance of a US$750 million Eurobond at a coupon of 5.25%. It is this loan that has recently been repaid.

“The redemption of the Eurobond in FY2025/26 was not only anticipated—it was meticulously planned in accordance with this principle. Through prudent fiscal management, we established a sinking fund that accumulated the necessary resources to meet our obligations without compromising service delivery or macroeconomic stability. Through this mechanism, we mobilised US$444 million, demonstrating our resolve to honour our commitments,” Shafudah said.

Shafudah highlighted that this achievement significantly improves Namibia’s debt profile, noting that most government debt is now held domestically rather than abroad.
“Domestic debt now accounts for about 85% of government debt, with only 15% owed to foreign lenders,” Shafudah said.

Addressing the remaining N$306 million in outstanding debt, Shafudah revealed that the government has issued a Request for Proposal (RFP) to local commercial banks.
She detailed that Standard Bank was awarded N$3 billion, divided into two tranches of N$1.5 billion each, at interest rates of 8.33% and 8.60%, respectively. She explained that this debt will be repaid through bullet payments over a period of three to five years. The minister further noted that FNB Namibia was awarded N$1.5 billion at an interest rate of 9.10%, repayable in a single bullet payment after five years, while Bank Windhoek, in partnership with ABSA, was awarded N$1.5 billion at 9.20%, also repayable in a five-year bullet payment.

“This strategy allowed us to avoid re-entering the Eurobond market under unfavourable global conditions. It preserved our foreign reserves, reduced exchange rate exposure, and reinforced investor confidence in Namibia’s creditworthiness. While foreign reserves are projected to decline from N$63 billion at the end of 2024 to N$47 billion by the end of 2025, we anticipate a moderate recovery in 2026, supported by sound fiscal planning and continued economic resilience,” Shafudah added.