Appetite for govt securities scales up
APPETITE for Government securities has been increased by 53 percent to K6.6 billion monthly with Treasury bills being auctioned every two weeks while Government bonds will be issued once ev ery month.
This is according to the 2022 first quarter auction calen dar for government securities posted on the Bank of Zambia website.
The Central Bank will now offer K2.0 billion worth of Treasury Bills every fortnight from the K1.4 billion while its monthly bond offerings has widened to K2.6 billion from K1.5 billion in 2021.
“The Bank of Zambia wish es to announce to the General Public that the auction sizes for the first quarter of 2022 will be K2,000 million for Treasury bills and K2,600 million for Government bonds.
“The Auction frequency for Treasury bills will be one auc tion every two weeks while Government bonds will be is sued once every month,” the
Central Bank said.
Commenting on this de velopment, the Kwacha Arbitrageur Magazine indi cated that the current state of the global economy character ised by excessive inflation and ultra-thin yields had pointed excess liquidity worldwide to emerging and frontier market assets Zambian paper inclusive.
The magazine stated that this had scaled demand higher for government bonds in the last three months coinciding with a political regime change that had improved Zambia’s sovereign outlook
“Zambia is currently grap pling with fiscal vulnerabilities exacerbated by an acute pan demic that has seen a widening in fiscal deficit that required funding.
“However, with default sta tus occasioned by skipping of coupon payments on its dollar bonds, Zambia has not been able to access credit lines exter nally and had opted to fund its fiscal needs domestically,” the magazine stated.
Zambia recently reached a landmark agreement with the International Monetary Fund Staff Mission team for a US$1.4 billion in extended credit facility for three years yet to be approved at the lend ers special board with expected disbursement forecast at the end of March 2022.
However, the 2022 budget requires funding in the mean time with a significant portion from the domestic money markets.