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Bonds and Treasury Bills example

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.

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Treasury Bills example

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.

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Government Bonds

  • 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 specific 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.

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Terms + conditions

  1. These investment opportunities are available to FNBB customers. All payments will be handled through a customer's account at any FNBB branch.
  2. Non-FNBB customers will have to meet all KYC (Know-your-customer check done by the bank) requirements before any transaction is done on their behalf.
  3. All retail investors will open a custody account with FNBB for safe keeping of their investments and to facilitate coupon payments.
  4. All investments shall have a minimum denomination of P10 000.00 and incremental values in multiples of P500.00.
  5. There shall be a custody charge of P100 minimum or 0.07% of nominal value - whichever is lower, per annum.
  6. The bonds/ TBILLS are dematerialised at the Bank of Botswana and are traded on a paperless ownership system. The buyer will be given a confirmation note from FNBB stating that we hold the bonds/ TBILL on his/her behalf in custody.

Treasury Bills and Bonds

More opportunities to invest

First National Bank of Botswana offers customers an opportunity to invest in Botswana Government issued Bonds and Treasury Bills.

What this is

Assisting in growth

A number of years ago, the Botswana Government decided to assist in the growth of a stable and vibrant capital market in the country. The Government therefore decided to issue debt instruments in the form of bonds and treasury bills. These are issued on a quarterly basis.

To assist in this growth, First National Bank Botswana offers customers an opportunity to invest in Botswana Government issued Bonds and Treasury Bills (TBILLS).

Government Bonds

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 specific return.

Treasury Bills

Treasury Bills trade on a discount yield basis. Treasury Bills do not have a coupon or interest rate like bonds.

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First National Bank of Botswana Limited - Registration number BW00000790476.