The central bank in Africa’s red metal hotspot, sold a billion Kwacha worth of Treasury bills in Thursday July 01 debt sale. Interest continues to be seen in the 1 year tenor despite inflation having overtaken yields across the current Kwacha demand curve.
Being the most highest paying bucket within a range of 20.89% -25.49% of accepted rates, a June inflation rally to a two decade high of 24.6% sent Treasury bill yields 140 basis points (bps) deeper underwater from previous levels widening the negative premiums for taking sovereign risks. Food prices remain the biggest threat to inflation that continues to erode the time value of a unit of Kwacha.
Appetite in bids was K1.22 billion a few millions of Kwacha below the K1.40 billion of assets on offer of which a billion Kwacha was allocated at cost with yields across the curve remaining static.
The next Treasury bill auction will be held a fortnight ahead on July 15.
The Kwacha Arbitrageur