[2008-10-07]  BSE To Debate Rules Of Illiquid Assets Transfer
The Botswana Stock Exchange (BSE) will on Thursday host a conference on how to change illiquid assets into instruments that can be issued and traded on the stock exchange.

The conference will deliberate on how the BSE can develop the bond market and securatisation. The development of this instruments will help transform illiquid assets on the local capital market. The issue of securities provides companies with cash-ßow it receives today instead of in the future when payments or revenues from the assets are collected.

According to the BSE, the rationale for securitisation for corporations is that it provides a new and potentially cheap form of funding.

"For banks and Þnance companies that have successful loan programs but are faced with capital constraint, securitisation is a means of removing assets from the balance sheet and freeing up capital to support further lending," says a research note by the BSE.

Securitisation also helps to release regulatory capital and to transfer the credit and market risk. The tool has become a signiÞcant capital management instrument in other markets. It accelerates income or Þxed returns.

The tool is attractive to investors because it gives them exposure to otherwise prohibited asset types and industrial sectors. It also allows investors to accommodate various risk appetites in one capital structure.Securitisation also has beneÞts for the national economy. Research shows that it reduces the annual cost of Þnancing for homeowners and others by up to 0.5 percent and this means that there are billions of freed up resources each year.

Assets that can be securitised include residential mortgages, car loans, commercial mortgages, credit card receivables, insurance contracts, trade receivables and debtors, leases, utility or telephone payments and asset backed securities. The BSE has invited many experienced experts that include the head of Debt Capital Market at Absa Capital in South Africa Werner Nel.

He has more than eight years investment banking experience, the last six of which has been at Absa Capital's debt capital markets.

Also to present is Tertius Smith, the managing director of Fitch Ratings responsible for the southern Africa market.

Locally, Martinus Seboni, the managing director of Investec Asset Management Botswana, and Mokgatla Madisha, portfolio manager and analyst responsible for the Investec Core Bond portfolio, will also speak at the conference.

The conference will be held at the GIIC and it will draw experts and financial players from South Africa and Botswana.


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