RBZ floats $300m additional TBs

RBZ floats $300m additional TBs
Published: 04 October 2019
THE Reserve Bank of Zimbabwe (RBZ) yesterday returned to the market with a fourth batch of treasury bills (TBs), this time seeking to raise ZWL$300 million to finance Government programmes.

The latest TBs have a tenure of 365 days and will be sold via an auction arrangement, said the RBZ in a statement.  

"The Reserve Bank of Zimbabwe hereby invites financial institutions including commercial banks, building societies, POSB and Infrastructure Development Bank of Zimbabwe (IDBZ) to subscribe to Treasury Bills amounting to ZWL$300 million," it said.

The offer, which closes today, has special features that include a prescribed asset status, liquid asset status, tradable, tax exemption and allotment at weighted average. TBs are negotiable instruments issued by Government through the central bank to finance the State's short-term requirements.  

The debt instruments are regarded as one of the safest forms of investment in the world as they are issued and backed by governments with little risk of default when it comes to payment on maturity.

TBs issuance had become a highly controversial issue in the previous administration as the Government raked up billions in debt through the instrument as well as a central bank overdraft facility to bridge its budget deficit.

Last year, Treasury moved to sanitise the issuance of the debt instrument by reverting to an auction system, which was last carried in 2012.  

The Central Bank last week said it got offers four times more than the $100 million it sought to raise through the third batch of TBs and this, according to the monetary authority, signals high investor appetite in the instrument.  

Out of the $100 million it sought to raise via the 92-day TBs, the RBZ in the results of the offer said total bids amounted to $419 million. The RBZ said it allotted $102 million out of the funds on offer, with the highest interest rate that was offered being 25 percent, while 12 percent was the lowest.

The average rate was 13.6765 percent.  Investment per investor was, however restricted to a maximum of two applications, of a minimum $1 million each.

- zimpapers
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