What are Government Bonds?

These are risk free long-term debt instruments (1 year and above) issued by the Central Bank of Eswatini on behalf of the Government of Eswatini. When bonds are bought, one cannot cash them before maturity but one can sell them in the secondary market either to a registered stock broker, a Primary Dealer. Because they are government-backed securities, they can be and are recognized as collateral by registered financial institutions.

What is the legal basis for Government bonds?

Government Bonds are issued under the provisions of the Treasury Bills and Government Stocks Act 1994 (as amended 2010), which sets a debt ceiling for the Minister for Finance on how much the government can borrow from the domestic market. Government has instructed the Central Bank of Eswatini as a fiscal agent for Government, to raise funds in the domestic market by issuing bonds.

Why does the Government issue bonds?

The Government of Eswatini, like other governments, issue bonds to raise money needed to meet budgetary needs. While Government also finances its operations through taxation and levies, sometimes these amounts are not sufficient. To finance the difference between the expenditure and the revenue (i.e. if it is a deficit), then Government may borrow by issuing securities. The Government also issues bonds in order to develop the domestic capital market as they provide additional investment avenues for both institutional and individual investors.

How do individuals invest in bonds?

The Government issues bonds in large denominations with a minimum of E10, 000. Bonds are sold at a discount, par or premium to their face value meaning that you can pay less, equal or more than the par amount, but at maturity you receive the par amount if the bond is held to maturity. If the bond is sold before maturity, the investor can either realize a Capital gain or loss depending on the level of yields in the market.

If the market yield is the same as the purchase yield there is no loss or gain, if the market yield is below the purchase yield there is a capital gain and the opposite if true for a market yield above the purchase yield.

Depending on whether interest is paid annually or semi annually an investor receives a fixed interest amount from investing in a bond based on the coupon rate.

Eligibility of bidders/participation in bonds

Auctions are open to all bidders at the Initial Public Offer (IPO) stage; this includes commercial banks, non-bank financial institutions, and stockbrokers, corporate and individual investors. Non-residents are also eligible to participate. In the secondary market participation to sell or buy is through Primary Dealers and brokers.

Currently, the Primary Dealers are Eswatini Bank, First National Bank Eswatini, Standard Bank Eswatini and Nedbank Eswatini. The brokers are African Alliance Eswatini Securities Limited and Eswatini Stock Brokers.

How does one submit bids?

Investors can contact Primary Dealers to make an application at the IPO stage of the bond issue. Institutional investors will bid competitively on a yield basis, whereas individuals and or Private investors will be awarded at the clearing yield.

Secondary Market Trading

The bond will be traded through Primary Dealers who will quote two-way prices at all times. Below is a formula for calculating the price of a bond.


P = C/ (1+i) 1 + C/ (1+i) 2 + C/ (1+i) 3 + C/ (1+i) n

+…+ 100/ (1+i) n


Where     C = Coupon for the bond i = yield

n = time to maturity

100 = 100% par value to be paid at maturity

P = current price

The minimum bid for Institutional/Corporate Investors is E1, 000, 000 (E1 million) and must be in multiplies of E1, 000, 000 (E1 million). For Individuals and or SME’s / Private Investors the minimum bid is E10, 000 and must be in multiples of E1, 000.

How does one get to know the outcome of his/her application?

Successful Investors will be notified by Primary Dealers or Broker used.

Settlement for bids is T+3, that is, investors have three working days after the auction date to pay for their bids.

Does one have a choice as to where the Bonds are kept?

Bonds are issued in electronically in a  de-materialized form. Participants in the system are entitled to a statement of their holdings after every transaction, on a monthly basis and are available on demand.

The Central Securities Depository System eliminates the need to print and manually handle securities and their risk of being lost, damaged or stolen.

This system also reduces the amount of time needed to deliver the security, and also it is linked to the settlement system which minimizes the settlement risk. Its efficiency is expected to stimulate the secondary market activities and facilitate open market operations. Further, it makes it easier for all investors to pledge these securities as collateral to their financial institutions.

How can one sell the bonds before maturity?

Contact your primary dealer or broker to facilitate the sale. Primary Dealers will be mandated to quote a two-way price at all times.

What happens when the bond matures?

The Central Bank will pay the face value to your account plus any accrued interest based on the coupon rate.

For more information

You can contact your Broker/Primary Dealers.



Allotment: The determination or the decision as to who gets the securities and how much they receive is based on the yield the bidder(s) provided on the tender form.

Bid (purchase) price: The quoted price, at which a market maker is willing to buy, say, a security, currency, commodity or any instrument.

Bidder: A market participant who quotes a price.

Central Securities Depository System: An electronic register that keeps records of ownership and transactions in financial instruments. The system replaces the paper based instruments and the physical exchange (trading) of such instruments. Its advantage lies in reduced paper work, reduced administrative loads and increased safety in dealing with given financial assets.

Closing date: A date on which the tender closes to the public, i.e. when all the tenders must be submitted and beyond which tenders cannot be accepted.

Dealer: Trader in securities, currencies, commodities or financial instruments.

Government Bond: Long-term government bearer security sold at par, premium or discount and pays interest semi-annual or annually. The purchase and sale of such bonds i.e. through open market operations, forms a key part of monetary policy, fiscal policy and financial sector development.

Face value: Apparent worth, or the nominal value that appears on the face of a document recording an entitlement, generally a certificate or bond.

Instrument: A type of financial debt paper.

Issue date: The date on which a security is issued. For Eswatini this is identical to the settlement date, though in theory the two dates could be different.

Liquidity: Depth of a market (e.g. security or commodities) and its ability to absorb sudden shifts in supply and demand without excessive price fluctuations.

Stock Brokers: These are registered and licenced Stock Brokers in Eswatini who will be trading the bond at the secondary market.

Primary market: Market for the placing of new securities such as international, domestic and foreign bond issues and stock with investors by the group organized to handle the issue.

Secondary market: A market in which existing securities are traded. Secondary markets provide liquidity (tradability) and thus create conditions for a healthy primary market.

Settlement: Completion of a security transaction by delivering required stock certificates and/or funds.

Settlement date: The deadline by which a purchaser of a financial instrument must pay for what has been bought and the seller must deliver the certificate for the security that has been sold. Settlement date usually coincides with the issue date. In the primary market, the settlement date is usually the second business day following the closing date of the tender.

Yield: A Bond has the following yields;

The Coupon – This is the interest rate fixed at issuance.

Current – This is the bond interest rate as a percentage of the current price of the bond.

Yield to Maturity: An estimate of what an investor would receive if he/she holds the bond to maturity.



This is prepared as a guide to investing in Eswatini Government Bonds with the sole purpose of familiarizing investors with the tender process for the Government Bonds. Therefore this neither constitutes an offer to buy or sell Government securities nor is it advertising investors to buy or sell such securities. While the information contained is believed to be reliable and all care has been taken in preparing it to ensure the reliability and accuracy of such information, the Central Bank of Eswatini will not accept any liability or responsibility for any damages or loss suffered by any person and or institution resulting from its reliance on any information contained.

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