Central bank in Africa’s copper hot spot, Zambia, on 28 February sold K500 million worth of short dated treasury assets in a debt sale that was 37% undersubscribed.
With market liquidity in excess of a billion Kwacha, bids totaling K598 million were all absorbed.
The market may seem long but liquidity is skewed to one or two players in the market, an unnamed commercial bank trader said.
The yield curve was infinitesimally changed with the most attractive tenors 9-months and 1-year fairly unchanged at 23% and 23.5% respectively.
All government debt sales save one, have been under subscribed including the first bond sale held last Friday 22 February.
Inferring from the Bank of Zambia Governors monetary policy speech on 21 February, governments borrowing needs exceeds the money markets needs and as such there is overcrowding effect which is keeping average lending rates elevated at above 24%.
Given the assets on offer versus the allocated amounts year to date, the BOZ is K2,031million (USD170 million) shy of it borrowing target.
***Compliled by Tionge Mbaale****edited by Oscar Meeander***