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How to calculate the return on investment


The example below shows the six Bonds and Treasury Bills currently on issue by the Botswana Government.

BOND NAME ANNUAL INTEREST RATE(COUPON) MATURITY DATE YIELD TO MATURITY(YTM) PRICE PER 100
TBILL 10 JUN 2015 1.90% 99.938
TBILL 09 SEP 2018 2.70% 99.244
BW003 10.25% 31 OCT 2015 3.60% 103.54208
BW005 10.00% 12 SEP 2018 4.55% 118.57660
BW007 8.00% 10 MAR 2025 5.65% 119.20236
BW008 7.75% 08 SEP 2020 5.20% 113.35204
BW010 7.75% 14 MAR 2015 4.30% 107.48475
BW011 7.75% 10 SEPT 2031 5.95% 120.27788

NB. Interest or coupons are paid out semi-annually and are fixed. Prices and yields will vary daily and over time.

  • Assume an investor buys P10 000.00 of the BW003 bond maturing on 31/10/2015 with a yield to maturity of 3.60%
  • This will translate to a price of 103.54208.
  • The investor will pay P10 000.00 x 103.54208%= P10 354.21.
  • Every six months the bond is held and on the coupon dates the investor will receive (P10 000.00 x 10.25% x 1 82.5days)/365 = P512.50.

If the bond is held to maturity, the investor will receive P10 000.00 plus P512.50 on 31/10/2015. This excludes all the other coupons they would have received before the bond matured.

Government Bonds explained


  • Bonds are debt instruments where the borrower - in this case the Government of Botswana - issues paper to the market where interested investors buy the paper for a specifc return.
  • A bond will typically have a maturity date sometime in the future, and an interest rate (also referred to as a coupon) that is payable at certain intervals during the year.
  • Bonds trade on a yield to maturity basis (YTM). The YTM is calculated based on current and expected future interest rate movements for a particular investment period.
  • This YTM is then translated to a price for that bond. That price is the amount an investor would pay for the bond.
  • Bond prices vary during the life of the bond. The variations are a function of current and expected future interest rate movements.
  • Because of this, capital investments or capital values of a bond investment will vary during the life of the bond, particularly if the bond is sold before maturity.
  • An investor in bonds may gain or lose capital on the investment, depending on the movements of interest rates between the time the bond was bought and the time it was sold.
  • However, if the bond is held to maturity, the investor will receive the full nominal value of the bond.

The example below shows the six Bonds and Treasury Bills currently on issue by the Botswana Government.

BOND NAME ANNUAL INTEREST RATE(COUPON) MATURITY DATE YIELD TO MATURITY(YTM) PRICE PER 100
TBILL 10 JUN 2015 1.90% 99.938
TBILL 09 SEP 2018 2.70% 99.244
BW003 10.25% 31 OCT 2015 3.60% 103.54208
BW005 10.00% 12 SEP 2018 4.55% 118.57660
BW007 8.00% 10 MAR 2025 5.65% 119.20236
BW008 7.75% 08 SEP 2020 5.20% 113.35204
BW010 7.75% 14 MAR 2015 4.30% 107.48475
BW011 7.75% 10 SEPT 2031 5.95% 120.27788

NB. Interest or coupons are paid out semi-annually and are fixed. Prices and yields will vary daily and over time.

  • Assume an investor buys P10 000.00 of the BW003 bond maturing on 31/10/2015 with a yield to maturity of 3.60%
  • This will translate to a price of 103.54208.
  • The investor will pay P10 000.00 x 103.54208%= P10 354.21.
  • Every six months the bond is held and on the coupon dates the investor will receive (P10 000.00 x 10.25% x 1 82.5days)/365 = P512.50.

If the bond is held to maturity, the investor will receive P10 000.00 plus P512.50 on 31/10/2015. This excludes all the other coupons they would have received before the bond matured.

Bonds + Treasury Bills in issue


Treasury Bills trade on a discount yield basis.

Currently there are two Treasury Bills in issuance by government.

Treasury Bills do not have a coupon or interest rate like Bonds.


How to calculate the return on investment

Using the example below, where the Treasury Bill discount rate is 61.90%, the price translates to 99.938.


BOND NAME ANNUAL INTEREST RATE(COUPON) MATURITY DATE YIELD TO MATURITY(YTM) PRICE PER 100
TBILL 10 JUN 2015 1.90% 99.938

The investor will pay (P10 000.00 x 99.938%) = P9, 993.80.

On maturity the investor will receive P10 000.00. The difference of P6.30 will represent the return on the Treasury Bill investment.

Treasury Bills explained


The Bonds/ Treasury Bills are dematerialised at the Bank of Botswana and are traded on a paperless ownership system.

The buyer will be given a confrmation note from FNB Botswana stating that we hold the Bonds/ Treasury Bills on his/her behalf in custody.

Documents needed


Non-FNB customers will have to meet all KYC (know-your-customer check done by the bank) requirements before any transaction is done on their behalf.

Qualifying criteria


  1. These investment opportunities are available to FNB customers. All payments will be handled through a customer's account at any FNB branch.
  2. All retail investors will open a custody account with FNB for safe keeping of their investments and to facilitate coupon payments.
  3. All investments shall have a minimum denomination of P10 000 and incremental values in multiples of P500.
  4. There is a custody charge of P100 minimum or 0.07% of nominal value - whichever is lower, per year.

Treasury Bills and Bonds


Invest in Botswana Government issued Bonds and Treasury Bills.

Government Bonds explained


Bonds are debt instruments where the borrower - in this case the Government of Botswana - issues paper to the market.

Treasury Bills explained


Treasury Bills trade on a discount yield basis.

Getting it made easy