adminthe 2011/2012 farming season.
Consolidated results for the tender, which initially closed on December 9, and subsequently extended to December 15, showed that total bids were US$31,9 million out of the US$50 million on offer.
The Government, through AMA, is on the market to raise US$100 million in two batches of US$50 million to finance the agricultural season.
The bills found little support among investors, even after the Government came up with “sweeteners”, which included prescribed assets status, liquid asset status and tax exemption.
Financial advisors CBZ Bank said the highest rate tendered for the 360-day bills was 19,75 percent and the lowest 10 percent, resulting in an average weighted rate of 11,27 percent for the amount allotted.
Analysts said the trend among investors to ask for higher rates for the long-term paper was a reflection of serious liquidity shortages on the market.
But this means that Government, as the guarantors of the tender, has to come up with the remaining US$32,2 million,
Last week, AMA and CBZ Bank announced the extension of the tender to this week, with another tender opening tomorrow and closing on December 23 2011.
CBZ Bank would guarantee the amount on offer, after Government guaranteed the first tender.
AMA and CBZ Bank extended the tender of the US$100 million 360-day agro bills following requests from potential bidders.
After this and also in the order to allow for possible future uses of the bills, AMA and CBZ announced the extension of the tender of the AMA agro bills.
Proceeds of the bills are expected to finance the 2011/2012 agricultural season as part of the Government’s efforts to unlock additional funding by the private sector to meet some of the financing gaps identified in the current agricultural season.
Cabinet had earmarked US$21 million to pay farmers owed by the Grain Marketing Board, US$18,6 million to cover what Government owes the seed and fertiliser companies and US$4,5 million to kick-start deposits required by seed and fertiliser companies to start deliveries.
The biggest chunk of the money – US$56,2 million – would be allocated towards new commercial financing to communal, A1, commercial and A2 farmers.
This is the second time AMA is on the market to raise funding after the first tender was grossly under- subscribed. The authority only managed to raise US$4,5 of the required US$20 million. The 270-day bills had total bids of US$17,6 million, an indication that the market was still squeezed of cash.
Online Reporter