THE Reserve Bank of Zimbabwe’s second attempt in as many days to issue $15 million of Treasury bills, the first offering of central bank securities since the country abandoned its currency in favour of the multiple currencies in 2009, failed again on Wednesday.
Report by Business Reporter/Bloomberg
In its first attempt on October 4, the central bank rejected the $7,7 million that had been offered with millions worth of bids with yields ranging from 5,5% to 15% in a bid to ease liquidity constraints on the domestic market.
A treasury bill (TB) is a short-term debt obligation backed by the government with a maturity of less than one year. TBs are issued through a competitive bidding process.
On Wednesday, officials said the central bank had rejected all bids for the 91-day bills.
A total of $11,2 million of bids were received at yields of between 5% to 14,5%.
Treasury bills were last sold in 2008.
Analysts yesterday told NewsDay that the challenge facing the current offering of TB’s was the non-existence of a benchmark interest rate that guides the market.
A benchmark interest rate is described as the minimum interest rate investors will accept for investing in a non-Treasury security.
“The other challenge could be that of high interest rates attached to the bills. Government, with its huge debt, will not want to borrow expensive money,” said an analyst.