The Bank of Zambia – BOZ on 25 April sold short-dated government securities worth K317 million (in cash terms) in a deeply under-subscribed debt sale. On offer was K950 million while all bids were absorbed totaling K384 million (in nominal terms). Today’s auction is the ninth under subscription of 10 debt sales and was a dejavus of last fortnights experience at 33% uptake signaling funding deficits for the government.
Auction subscription skew was in the 1 – year and 9 – month at 53% (K168 million) and 44% (K139 million) whose pricing is fairly attractive at 24.25% and 24.9999% respectively.
Yields widened 94 basis points and 75 basis points in the 1-year and 9 – months respectively. Non Deliverable Forward (NDF) yields remain at premiums above the Kwacha primaries between 290 – 890 bps signaling perceived elevated credit risk by the offshore market.
Currency risk continues to elevate with the Kwacha weakening further to K12.65 as offshore players continue to dis-invest but are opting to secure liquidity in safer haven currencies such as the dollar. Additionally BOZ was in the market today and most of the week for dollars in a quest to shore up falling reserves.
Zambia’s central bank will attempt to sell K1.65 billion in the second fixed income debt sale of the year.