NSL supports govt on sovereign bonds issue

NAMBAWAN Super Ltd has supported the Government on the issue of sovereign bonds, seeing it as a sign of confidence in economic prospects of the country.
Chairman Anthony Smare said in a statement the bonds followed several unsuccessful attempts to tap international credit markets.
The state was able to place US$500 million (K1.7 billion) of 10-year bonds at 8.375 per cent to international investors.
“PNG’s local credit markets had shown signs of reaching saturation point over the past few years, as banks and superannuation funds were approaching their maximum exposure limits in regard to investing in treasury bills and government inscribed stock (GIS),” Smare said.
“By approaching international capital markets, the State was able to seek alternative sources of financing, unavailable to the State by further issues of local currency instruments.
“Firstly, international investors have been able to assess the ability of PNG to fund the bonds over 10 years, and have clearly liked what they saw as the bond offering was several times oversubscribed.
“International investors have seen the figures, and supported the bonds on the basis that the Government’s fiscal discipline has led to stabilising budget deficits and gross debt to GDP at sustainable levels.
“International investors have this year been reluctant to finance emerging markets and frontier market bonds and
equities, so it is significant that the State of PNG was able to tap such an uncertain global market. Secondly, by increasing the sources of funding available to the State, it is very possible that the State can reduce the issue of expensive local funding.