BOZ OPTMISTIC OVER BONDS
THEBank of Zambia (BoZ) has continued to see strong interest for five year bonds which were the most sought in the June 25 debt sale yielding 32.0 percent.
The Central Bank raised a total of K1.1 billion at cost of the K1.5 billion worth of assets on offer.
Appetite in bids was reported at K2.2 billion at face value of which K2.0 billion was allocated, according to the Kwacha Arbitrageur magazine.
According to the magazine, last week’s Friday’s auction skew was concentrated on the medium term portion of the yield curve, taking up 88.0 percent of the proceeds.
“This is a deviation from previous bond sale that saw record appetite of K9 billion and appetite for even longer dated tenors greater than the five year bond.
“Yields in these primaries were fairly unchanged across the curve except for infinitesimal moves in the 3 and 5 year tenors that rallied 20 and 99 basis points (BPs) to 30.5 percent and 32.0 percent respectively,” it indicated.
The magazine observed that the Covid-19 pandemic would be a key driver in determining rate decisions this year.
Zambia central bank kept rates unchanged at the last rate decision meeting weighed by pandemic risks that have today deepened and could continue to shape monetary policy this year despite spiralling inflation.
Zambia Statistics Agency reported a 140 BPs spike in June annual inflation to a 19 year high of 24.6 percent which narrows the compensating premium for those taking risk in government securities. A consumer price index spiral ink the Treasury bill curve underwater but not for offshore players whose concern remains more about the exchange rate.