LUSAKA (The Business Telegraph) – With liquidity north of K3.5bln, the central bank in Africa’s second largest copper producer sold a yard in cash terms absorbing part of the K1.25bln appetite observed. Of the total bids received K891.6mln was for 1-year paper which housed K867.1mln of that liquidity locking in at 25.48%, 52 basis points lower than a fortnight ago.
Six and nine month bulls. A stronger rally was observed in the 6 and 9 month buckets whose yields softened 100 and 200bps respectively to 17.5% and 22.0% respectively. The Kwacha short end term structure of interest rates has extended its climb down significantly widening that lag with the fixed income end of the curve that remains elevated between 25%-33%.
Three month bills still underwater. The 91 day treasury bill yield ebbed 50bps lower to 14.5% and remains underwater adjusted for inflation which infinitesimally softened a basis point to 15.8%. This makes the 91-day asset unattractive currently.
The Bank of Zambia will be offering K2.67bln worth of 5,7,10 and 15 year COVID bonds on Friday 31 July.
The Kwacha Arbitrageur
