RBZ fails to raise Z$160 billion

HARARE - Having failed to get support for the 3-year government bond, which closed a fortnight ago the Reserve Bank of Zimbabwe re-issued a Z$160 billion bond last week in a bid to raise money 
Like the previous one, the bond, which is meant to finance capital projects, has a prescribed and

liquid asset status by the Ministry of Finance, is acceptable as collateral and overnight accommodation by RBZ and will be redeemed/payable at RBZ upon maturity.
The previous bond was grossly under-subscribed by 94,2% as only Z$9,3 billion out of the required $160 billion was received and allotted due to, among other factors, lack of appetite for long-term investments in the current uncertain economic environment. 
Although not much has changed in perception between last week and now, the easier money market liquidity conditions obtaining this week have seen an increase in take-up for the Treasury bill to avoid money being taken at 0% for between 90-270 days. 
Although the 3-year bond has a higher yield of 350% during the first year, investors prefer the relatively shorter-dated 1-year Treasury bill, which is yielding at slightly lower 340%. 
This is because investors are not sure what would happen to alternative investments in 2008 as they may turn out higher than the 270% on the 3-year bond.  This means that investors would rather go for the 1-year Treasury bill instead of the 3-year bond when hard pressed to place funds so as to avoid the 0% yielding asset. – Business reporter

Post published in: Economy

Leave a Reply

Your email address will not be published. Required fields are marked *