The central bank in Africa’s red metal producer sold the Kwacha equivalent of $86.6million worth of treasury bills in Thursday 26 September auction that was 20% oversubscribed. With a cash flush market north of 1.4 yards in local currency into the debt sale, the BOZ recorded very bullish interest of K1.67billion of which K1.14 billion (at cost) was absorbed. This is the second auction the central bank is tapping into its 20% quota (above the K950million).
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As expected demand for 1yr assets persists given the current yields of 27.5% while the 9 months still housed significant interest for its 26.5% yields. The Kwacha demand curve was unchanged.
Liquidity was fueled by the value added tax refund cycle adding into some maturities that players could have still re-invested in search for higher yields. The auction. However had very little offshore interest as they sit on the fence to get clarity on Zambia’s fiscal direction given the budget presentation on Friday 27 September.
The Kwacha Arbitrageur
