This is the seventh under subscription of eight auctions year to date.
Central Bank in Africa’s copper producer, Bank of Zambia (BOZ), on 11 April sold K239-million ($23.43-million) worth of treasury bills that was 30.5% subscribed. This was the eighth debt sale of the year. Of the K950-million on offer, the BOZ, sold K290.35-million in cash terms (K349-million) in nominal terms. The debt sale absorbed all bids raised by players.
Of the K290.35 million allocated, 70% was concentrated in the 24% paying 1-year tenor while other 30% was allocated to the other tenors. Yields rose across all tenors rose with the largest bears observed in the 6-months which rose by a 100bps while the 3-month widened by a 75bps spread. One (1) year bills remain the most attractively priced assets with 9-month paper 50bps lower at 23.5%.
With K1.8-billion in market liquidity as measured by aggregate inter bank current account balance, players shied away from the debt sale seeming to suggest either liquidity skew anomalies in the market or that Kwacha assets are generally becoming unattractive given the risk premium comparisons with other assets at investors disposals.
Secondary market trading reveals that government security holders are more keen to sell off than lengthen duration contributing to asset sell off pressure.
Spreads between treasury bills and forward rates have widened, to 1,043bps on average (across the entire curve), suggesting that offshore players expect a higher premium on government securities given the risk sentiment. However premiums, are narrower on the longer end of the Kwacha curve at 390bps.
Undersubscriptions signal deficits in funding whose gap has widened by K660-million in Thursdays debt sale.
