With K2.73billion of liquidity into Friday 29 May fixed income sale, the central bank in Africa’s copper producer, sold K202.44million ($11.06million equivalent) worth of government bonds, a deep undersubscription from the K1.10billion assets on offer. This dismal performance reflects the risk skew towards shorter dated higher yielding assets as players shy away from longer tenors on account of uncertainty exacerbated by deteriorating sovereign risks especially in COVID era.
Market bids totaled K331.85million while strongest appetite was observed in the 2 year that housed K109.77million paying 30.95% while the 5 year absorbed K56.96million paying 33.00%. Yields were unchanged save the 3 year tenor that repriced 225basis points to 32.00%.
The Bank of Zambia as part of its April stimulus package commitment to managing liquidity conditions, has injected K1.50billion worth of cash through Open Market Operations – OMO keeping money markets afloat.
The Kwacha Arbitrageur