INVESTOR interest in Treasury bills dropped to 32.5 percent from an average of 83.0 percent in the last quarter of 2015 due to lack of investor appetite to participate in the bills, Bank of Zambia Governor (BoZ) Dr Denny Kalyalya has said.
Treasury bills are Government bonds or debt securities with maturity of less than one year or less, they are money markets backed by the United Sates Governements.
Speaking in side-line interview after presenting the BoZ’s monetary policy committee statement for first quarter of 2016, Dr Kalyalya said the Government’s quickest way of raising money, Treasury bills, declined significantly in the last quarter of 2015.
“Government raises its money through borrowing and revenues and issuing Government Treasury bills is one of the quickest ways in which it raises money.
“What we have observed is that in the period that we are talking about, Treasury bills dropped significantly,” he said.
Dr Kalyalya said banks’ appetite for Treasury bills had significantly declined during that period.
“Investor subscription on Treasury bills dropped to an average of 32.5 percent from an average of 83.0 percent in the previous quarter. The appetite for investors which are banks declined in participating in the Treasury bills,” he said.
Dr Kalyalya said yield rates on Treasury bills generally declined, with the composite rate falling to 20.7 percent from 21.7 percent.
He encouraged members of the public to participate in Treasury bills and bonds market.
“What we are also doing in the meantime is to encourage you the locals to participate in the Treasury bills and bonds market. We have seen this picking up; you can participate in the competitive window as well as the non-competitive.
“In the competitive window, you have to make a bid and tell us what you want to pay while in non-competitive you get the rate determined from the competitive,” he said.
Dr Kalyalya said tight liquidity levels in the economy resulted in the decline in demand for Government securities such as bonds and Treasury bills.
He also said similarly, investor participation in the bond auction significantly declined to an average of four percent from 87 percent in the third quarter of 2015.
Dr Kalyalya however said the composite yield rate on Government bonds rose to 25.9 percent from 23.4 percent as market players sought higher returns in light of tight liquidity conditions.