The central bank in Africa’s red metal producer sold a yard (K1billion) worth of treasury bills. With a K1.5billion liquidity into Thursday 11 October sale, purchasing power was adequate to absorb the K950million of short date assets representing 106% subscription rate. Market appetite totalled K1.25billion of which 65% (K806million) was in the one year yielding 27.5% while K288million was recorded interest for 9 month paper priced 100 basis points lower that the 1 year at 26.5%.
Thursdays treasury bill outcome is the third oversubscription of the year of the 21 debt sales supported by excess liquidity aftermath of value added tax refunds that the money markets experienced in the last few weeks. However given the K2billion in provisional taxes to be mopped versus the K300million maturities for Monday next week markets are forecast to be tight which will provide support to the Kwacha in the immediate to medium term.
Next Thursday 17 October, Bank of Zambia will offer K1.65billion worth of fixed income securities whose subscription is forecast to be impacted by the tight liquidity from tax out flows for provisional taxes. The auction will be a day earlier given that Friday 18 October, is a kwacha holiday.
The Kwacha Arbitrageur.
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