Bank of Zambia Raises ZMW 598million in Undersubscribed Treasury bill Sale
The Bank of Zambia on Thursday 12 Oct. raised ZMW598million ($62million) in Treasury bill sales. On offer was ZMW900million while bids totaled ZMW598million off which ZMW530million were satisfied. Bid cover ratio was 1.12. The auction was 34% undersubscribed in sale that was concentrated in the 1yr tenor which accounted for 75% weighting.
Appetite for the 365 day tenor was highest due to attractive yields pegged at 15.5% a 45bps (0.45%) decline from a fortnight ago.
The Kwacha yield curve has for weeks been kinked at the 1yr point making it attractive to lock in money for a year. However the interest rate view is changing following Zambia’s IMF package delay which is poised to exert pressure on bond and Treasury bill yields. This will be as a result of government using the domestic money markets to raise funding for its economic programs.
Interest rates “will go up very significantly” if debt is not managed and economy overheats, Bank of Zambia Governor Denny Kalyalya says in interview in Washington.
Zambia has a bond auction and a rate decision meeting coming up next month.