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The Bank of Zambia has unveiled a set of reforms in the Government Securities market designed to enhance liquidity, improve operational efficiency, and support the expansion of the domestic debt market.
These measures are intended to strengthen the country’s capital market by promoting better price discovery, increasing market activity, and attracting a wider range of investors.
In a public notice, Besnat Mwanza, Assistant Director for Communications at the central bank, stated that Liability Management Operations would be introduced in the second quarter of 2026.
“This initiative aims to boost liquidity in benchmark bonds while also refining the maturity structure of Government securities,” she said.
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Mwanza explained that under this programme, investors holding selected bonds would have the option to redeem them before maturity in exchange for benchmark bonds.
This is expected to enhance market participation and provide greater flexibility for investors.
Further details, including the effective date and operational framework, are expected to be announced in June 2026.
As part of the reforms, the central bank has designated the 5-year, 7-year, 10-year, and 15-year Government bonds as benchmark instruments effective April 2026.
However, although the 5-year bond will retain its benchmark status, it will not be issued for the remainder of the year after reaching its target size.
Meanwhile, the three-year Government bond will no longer serve as a benchmark. Both the two-year and three-year bonds will continue to be issued, but as non-benchmark instruments going forward.
“Benchmark bonds play a key role in financial markets, acting as reference points for pricing other debt instruments with similar maturities,” Mwanza said.
Mwanza also noted that the central bank had set a minimum target size of K10 billion for each benchmark bond and intends to gradually build up the outstanding stock to this level.
To support this effort, the Bank will begin reopening benchmark bonds starting in April 2026.
Additionally, adjustments have been made to the auction schedule.
Beginning in the second quarter of 2026, government bond auctions will be conducted twice per quarter instead of monthly.
However, Treasury bill auctions will continue on a biweekly basis.
The Bank further indicated that the quarterly auction size for government bonds would be set at K6.3 billion, while Treasury bill issuances will remain unchanged at K2.2 billion.
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