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This year’s second government bond auction saw a sharp rise in demand for long-term securities, with bids climbing more than threefold to a record K21.33 billion, compared to nearly K10 billion recorded in January.
With the government offering K4.2 billion worth of bonds, the auction was heavily oversubscribed, pushing the subscription rate up to 507.98 percent from 240.16 percent in the previous auction.
According to ZANACO’S weekly financial market update released yesterday, the strong demand prompted the government to reject close to 54 percent of bids, amounting to K11.45 billion.
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As a result, yields declined across all bond tenors.
Yields on two-, three-, five-, seven-, ten- and fifteen-year bonds dropped by 40, 89, 112, 85, 59 and 120 basis points respectively.
The rates fell to 14.5 percent, 14.9 percent, 14.98 percent, 16 percent, 16.6 percent and 17.59 percent, down from 14.9 percent, 15.79 percent, 16.10 percent, 16.85 percent, 17.19 percent and 18.79 percent.
ZANACO noted that the continued decline in government paper yields, combined with easing monetary policy amid moderating inflation, is expected to contribute to lower lending rates in the near term.
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