BOZ sells USD27 mn worth of treasury bills in poorly subscribed auction...
Zambia’s central bank sold the Kwacha equivalent of USD26.7mn of treasury bills in a poorly subscribed government debt offering. With ZMW950mn on offer, the BOZ only absorbed ZMW267mn of the ZMW315mn bids. The Kwacha treasury bill market has seen depressed appetite in the last 8 weeks with yields or returns edging higher at every auction. As expected, the 1yr treasury bill was the most demanded with appetite as measured by bids totaling ZMW303mn of which ZMW256mn was absorbed. The one year accounted for 96% of the allocated amount at a yield of 18.35% (55bps from a fortnight ago at 17.81%). The 9m yield slowed 150bps to 12% and was the least attractive. With the weak auction turn outs, it is suspected that the state could be running shy of its funding targets using the money markets.
‘ The Kwacha assets are currently priced at decent premium above inflation of 7.1% but there’s very little appetite for risk in short dated BOZ assets. With the sentiment around debt and uncertainty around the IMF bailout package, most players have taken a cautious stance especially in the short term for the Copper producer,” Kondwani Phiri a ZBT Economist said. The currency crossed ZMW10/USD and has reversed some losses as corporates convert dollars to meet provisional tax obligations falling this week. Reserves nonetheless are still very low at USD1.87bn below acceptable import cover. Zambia is in a very delicate spot, he said.
The next treasury bill offering will be on 19 July.