LATEST: RBZ in another $300mln TBs issue

Oliver Kazunga, Senior Business Reporter

THE Reserve Bank of Zimbabwe (RBZ) on Thursday returned to the market seeking to raise another $300 million to finance Government programmes through the issuance of Treasury Bills via an auction system.

TBs are negotiable instruments issued by Government through the central bank to finance the State’s short-term requirements.

In a public notice, the RBZ said it was in the market to float a tender for the182-day TBs amounting to $300 million.

“The Reserve Bank of Zimbabwe on behalf of the Government of Zimbabwe hereby invites commercial banks, building societies, POSB (People’s Own Savings Bank) and IDBZ (Infrastructural Development Bank of Zimbabwe) to subscribe to a Government Treasury Bill tender amounting to $300 million.

“Applications must be for a minimum amount of $1 million. The number of bids per investor is restricted to two and copies of the application forms are available from RBZ local dealers.”

The TBs, which will be allotted to successful bidders today, have special features including prescribed asset status, liquid asset status, tax exemption and acceptability as collateral for overnight accommodation at the central bank.

TBs have different maturities, and the “test” TBs had 91-day, 182-day and 365-day maturities at interest rates of 16,5 percent, 19,6 percent and 17 percent, respectively.

In 2018, Treasury placed a suspension on the issuance of TBs, as there were concerns that the market had become flooded. Last year, the RBZ issued TBs worth US$6,3 billion of which US$1 billion were issued for the Zimbabwe Asset Management Company (Zamco) to purchase non-performing loans (NPLs).

Figures from Treasury indicated that around 50 percent of the TBs were being held in medium to short-term paper while 26 percent had tenures of between 2,5 to five years.

About 17 percent of the TBs have tenures of between six to 10 years, and the balance have a tenure of between 11 to 15 years.

TBs from the secondary market have coupon rates ranging from two percent to five percent with maturity periods ranging from one year to four years.

A number of financial players hold Government-issued TBs as they have become the main debt instrument available on the market after Government converted its legacy debt into short-dated Government security.

-@okazunga