BOZ sells USD27 mn worth of trea­sury bills in poorly sub­scribed auc­tion...

Zambian Business Times - - FRONT PAGE - By Chief Mar­ket An­a­lyst

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.

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