With a lean market position of K525 million into the twenty fourth treasury bill sale of the year, the central bank in Africa’s red metal producer were able to raise proceeds translating to the full amount of asset on offer plus additional 20% of their quota.
The government security sale recorded K1.6 billion in appetite skewed in the usual tenor the 1yr paying 27.5% and surprisingly in the 6m bucket yielding 19%. Allocation in cash terms totaled K1.14 billion.
Yields across the spectrum were unchanged save the 6 months that eased 15bps to 19%.
This T-bill sale comes a day after the Bank of Zambia hiked its benchmark interest rate by 125bps to 11.5% in an effort to curb a sliding currency that traded at all time lows. A week to the rate decision meeting the central bank widened the liquidity spread on the overnight lending rate to banks for emergency funding purposes by 1,000bps to 28% as the regulator reigned in on inflationary pressure.
In the quest to reign in on a fiscal deficit to get closer to the budgeted 6.5%, the Ministry of finances appetite for funding will increase to highly likely fill up the last 4 government security auctions of the year. Maturities of about four yards are expected to the end of year of which those for offshore investor could be dollarised adding asset sell pressure to the already weak currency.
The Kwacha Arbitrageur