Mozambique: State places €47.5M in 10-year treasury bonds

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Mozambique: State places €47.5M in 10-year treasury bonds

10:50 CAT | 21 Jul 2023

File photo: RM

This month, Mozambique has placed 3.4 billion meticais (47.5 million euros) in ten-year Treasury Bonds in a single operation through the stock market, according to official information consulted by Lusa on Thursday.

According to information from the Mozambique stock market, the operation was carried out on 13 July, through a special session aimed at determining the results of the 2023 Treasury Bonds Issue – 5th Series.

It adds that according to the proposals submitted by the Specialised Treasury Bond Operators, the overall demand for the issue was 4,850 million meticais (€67.8 million), “with demand outstripping supply by 161.67%, with a minimum interest rate of 16.000% and a maximum of 19.000%”.

According to the “state cut-off rate”, the value of this issue totalled 3.4 billion meticais (47.5 million euros), the Mozambique stock exchange said.

The launch notice for this operation, dated 10 July, stated that an initially defined “maximum amount” of 3 billion meticais (42 million euros) would be put up for subscription, with a fixed nominal interest rate of 17% and a maturity of 10 years and five months, although with the possibility of increasing the amount to be raised if demand was higher.

The Mozambican government defined, in the documents supporting the 2023 state budget law, the objective of “progressively increasing the use of higher maturity debt instruments in domestic financing”, with maturities above five years, “replacing Treasury Bills that are subject to high refinancing risk”.

“Highlighting that the mobilisation and dynamization of domestic investors may enable an effective dispersion of securities, in addition to commercial banks, thus contributing to the containment and reduction of the degree of concentration of sovereign liabilities in the national banking system, which will mitigate the crowding-out effect resulting from growing public indebtedness,” reads the documents supporting the state budget law, consulted by Lusa.

The government has entered in the state budget a forecast of total expenditure on Mozambique’s public debt in 2023 of 41.400 billion meticais (578.8 million euros), of which 29.950 billion meticais (418.7 million euros) refers to the payment of internal interest and 11.450 billion meticais (160.1 million euros) for interest payments on external debt, corresponding to 2.3% and 0.9% of Gross Domestic Product (GDP), respectively.

In 2023, the government estimates that the budget deficit will stand at 115,058.6 trillion meticais (€1.608.5 billion), corresponding to 8.7% of GDP, while the primary balance will amount to 41,236.2 trillion meticais (€576.5 million), or 3.1% of GDP.

The Mozambican economy is expected to grow by 5% in 2023, according to the government’s forecast.

Source: Lusa