The central bank in Africa’s red metal hotspot will seek to sell government securities worth K12.3bln ($585.2mln equivalent) in the first quarter of 2021. According to a Bank of Zambia prospectus shared in the local press, the central bank will offer treasury bills in six lots of K1.3bln and bonds in three lots of K1.5bln respectively.
Risk skew is forecast to remain towards shorter dated higher yielding assets as Zambia’s 2021 will be characterized by uncertainty around political risk factors as the copper producer readies to go to the polls while sovereign risks persist as the debt restructure progresses.
Offshore participation is projected to remain muted given the countries default rating by Standards & Poor’s and Moody’s rating agency.
The year 2020 saw treasury bills outperform bonds in subscription on the back of duration whose theme is likely to persist in 2021. The yield curve remains elevated in the longer end yielding 30-35% while the shorter end remains pegged between 14-25%.
The Kwacha Arbitrageur