AMA to raise funds for agric

The issuing of the bills come barely two weeks after the issuing of another $20 million AMA bills aimed at financing the production of soya beans.
According to a weekly market report released by Kingdom Financial Holdings Limited, the AMA bills have a tenure of 360 days and were being offered in multiples of $10 000 with a minimum subscription of $10 000 and interest rate to be determined on tender basis.

“The offer opens and closes on the 9th of December 2011 and bills carry a Government guarantee and CBZ bank credit rating,” said KFHL.
The report said similar to the previous issue, the bills carry a prescribed asset status, a liquid asset status and are tax exempt.
KFHL commented: “We doubt the issue will garner sufficient support given that the previous AMA bills to raise $20 million failed to raise the targeted amount after only 25,6 percent of total bids were allotted. A sum of $4,5 million was raised from total bids of $17,6 million, an indication of the liquidity crisis in the economy and high interest rates quoted on the bills.”

The financial institution said the results of the first issue showed that the highest rate tendered for the 270-day bills was 25 percent while the minimum rate was 8,5 percent and the average weighted rate of allotted bids was 10,67 percent.

KFHL noted that following the presentation of the 2012 national budget, however it was anticipated that the $100 million bills would attract lower interest rates as in the previous issue as liquidity was also expected to improve as a result of proceeds from diamond sales.

Lending rates are expected to decline to the 15 percent average, down from the 18 percent level being quoted at the moment.

The resuscitation of lender of last resort function of the Reserve Bank through the availing of a proposed $100 million facility was expected to see the rejuvenation of interbank activity, which will improve the intermediary process on the money market.
The financial institution also noted that the efficient distribution of available liquidity stemming from restoration of interbank activity is expected to even out interest rates quoted across the country.