Yields on Bonds up by 3 percent

By BUUMBA CHIMBULU YIELDS on Government securities, particularly the bonds, last week edged higher by over 3 percent owing to reduced liquidity in circulation.

And the Kwacha is this week expected to trade in the range of K10.000-K10.050 against the dollar with a biased towards a strong local currency.

On the bond market, First National Bank (FNB) in its daily newsletter indicated that the bond tender end of last week auction was undersubscribed owing to the reduced liquidity in circulation.

According to the bank, yields edged higher, with the biggest move witnessed on the 7-year bond from 16 percent to 19.5 percent.

Another shocking result was on the 10-year bond whose yields jumped from 18 percent to 21 percent. “We are of the view that the market has now turned and we could continue to see yields on government securities trend higher in the short to mediumterm,” reads the newsletter.

Meanwhile, last week saw the Kwacha decline sharply, closing at K10.050 against the greenback.

The noticeable increase in demand coincided with a period when supply was supposedly strong owing to the bond tender, but this could not support the local currency.

FNB explained that the move from K9.860 at the beginning of last week to K10.050 where the week closed was quite swift.

However, the bank was positive that supply was expected to improve in the new week.

“The current levels are quite attractive and could generate selling interest. We expect the kwacha to trade in the range of K10.000-K10.050 with a biased towards a strong Kwacha,” reads the newsletter.