Mozambique: Single issue of treasury bonds sees equivalent of €51.2M placed

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Mozambique: Single issue of treasury bonds sees equivalent of €51.2M placed

8:35 CAT | 26 Sep 2023

File photo: Lusa

Mozambique on Tuesday placed 3.509 billion meticais (€51.2 million) in a single issue of treasury bonds (OTs), through the Mozambique Stock Exchange (BVM), with demand exceeding supply.

At issue was an operation for direct subscription by Specialised Treasury Bond Operators (OEOT) of up to 3.509 billion meticais -which was fully taken up – relating to the eighth series of 2023 treasury bonds, the first operation of its kind in September.

The overall demand for this issue was €4.369 billion meticais (€63.8 million), “with a demand to supply ratio of 124.51%, with a minimum rate of 16.000% and a maximum of 21.000%,” in an operation with a maturity of 10 years and a fixed interest rate of 16%.

Since January, Mozambique has placed €28.910 billion meticais (€422.3 million) in treasury bonds through the stock exchange, with the legal availability to issue a further €7.738 billion meticais (€113 million) by the end of the year.

According to decree 14/2023, issued by the Ministry of Economy and Finance on 18 January, the schedule for issuance of OTs – public debt issued with longer maturities – for this year provides for an overall limit of 36.648 billion meticais (€526.4 million), preferably in two issues per month, up until 5 December.

Data from the BVM compiled by Lusa indicates that 14 issues have already been made – including reopenings of scheduled issues – in 2023, with maturities of up to 10 years and yields ranging between 17% and 19%, so amounting to almost 80% of the legal limit for OT issuance for this year.

The amounts raised in each operation ranged from 475 million meticais (€6.8 million) on 8 August to the 5.946 billion meticais (85.3 million) raised in an operation held on 7 March.

Mozambique’s government had previously approved the so-called Public Debt Management Strategy 2023-2026, which guides debt options over the next few years and aims to “bring limits to debt sustainability indicators in credit contraction.”

In terms of external debt, it said that it plans to “prioritise financing in the form of donations” and “in the form of highly concessional loans for profitable projects,” while in terms of domestic debt, the priority is to “prioritise the issue of long maturity treasury bonds.”

Source: Lusa