By BUUMBA CHIMBULU
THE Bank of Zambia (BoZ) is this Friday expected to witness a record participation from international players as it seeks to raise K1.4 billion (US$73.7 million) in Government bonds.
This expectation comes after prices for Zambia’s dollar bonds last week rallying 8.0 percent across the board as Eurobond markets priced in news of a leadership change, signalling investor confidence.
With the boost in confidence, it is forecast that Friday’s auction will attract record participation as international players seek to book the post-election bump bond trade, according to the Kwacha Arbitrageur magazine.
The Central Bank will on August 27, seek to raise K1.4 billion (US$73.7 million) in Government bonds. “This will be a special post-election bump bond offering in a week that the Zambia has seen a change in leadership.
“The leadership change has seen risk appetite claw back into the Zambia markets with money managers in Wall Street recommending Kwacha assets to offshore players seeking yield on the back of subsiding political risks,” the magazine stated. It stated that the state of the global economy given high inflation but ultra-thin yields on treasuries had supported the influx of offshore flows into emerging and frontier markets.
This is so as investors hunt for real positive yields which Zambia had not been exempt. According to the magazine, real yield remained positive as investors were able to lock in between 26 percent and 30 percent in returns on the secondary market.
“For liquid markets sentiment proxies trended positively with Zambia’s Eurobond prices on a winning streak appreciating 8% across the board for its 2022, 2024 and 2027. “Additionally inflows from this ‘govie’ gold rush will likely provide support to the currency whose outlook has continued to improve as sentiment seeps back into the markets,” it indicated. The dollar bonds last week rallied 8.0 percent across the board to 69.996/70.733 (2022), 71.936/72.742 (2024) and 71.171/71.895 (2027) in bid or ask, signalling investor confidence in the new elect leadership.