TRYNESS TEMBO, Lusaka
LAST week, treasury bills auction was over-subscribed, receiving bid worth over K1.2 billion against an offer of K810 million, financial market players note.
This means that there was demand for financial securities exceeding the total initial target that was offered.
Treasury bills, which are short-term debt obligations backed by the government with a maturity of less than one year, segmented in 91, 182, 273 and 364 days, have varying interest rates of between 9.25 and 15.34 percent.
Both Access Bank Zambia and Zanaco note that yield rates dropped on all tenures, 91 days from 11.75 percent to 9.25 percent, 182 days from 11.50 to 9.50 while the 273 days and 354 days from 10 percent to 9.50 and 16.75 to 15.34 respectively.
Access Bank Zambia says the treasury bill rates fell across the board by an average of 160 basis points on last week’s auction.
“The auction was over-subscribed at a bid cover ratio of 1.53. A total of K1,202.23 million nominal value was accepted by the Bank of Zambia [BoZ] against an initial offer of K810 million,” the bank says in its treasury market watch.
Similarly, Zanaco, in its daily treasury newsletter, says of the total over K1.2 billion received, a total of almost K1.04 billion was allocated.
On the local money market, it witnessed a reduction to about K1.39 billion from over K1.68 billion on Wednesday.
Liquidity is a term used to describe how easy it is to convert assets to cash, last week the local money market has seen an upward increase in liquidity levels with Wednesday’s being at over K1.6 billion from about K1.5 billion on Tuesday.
“The bank’s aggregate current account balance reduced to K1 392.99 million from K1 687.37 million and the volume of traded funds increased to K318.80 million from K264 million,” Zanaco says.
Meanwhile, the cost of trading interbank funds dropped to 11.73 percent from the previous day’s 11.93 percent.
On the local currency market, the Kwacha continued to trade a very narrow range against the United States (US) dollar last week and is anticipated to trade in the K8.95 and K9.15 range in the near term.
Access Bank Zambia, United Bank for Africa (UBA) and Zanaco project that the local currency will continue on a strong note due to several corporates converting to meet their month-end tax obligations.