Mozambique: Treasury places 481M meticais in bonds; demand three times supply

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Mozambique: Treasury places 481M meticais in bonds; demand three times supply

10:57 CAT | 24 Aug 2023

Lusa

Mozambique has placed 481 million meticais (€6.9 million) in a single issue of Treasury Bonds, through the Mozambique Stock Exchange (BVM), with demand three times supply.

The operation for direct subscription by Specialised Treasury Bond Operators (OEOT) of up to 500 million meticais (€7.2 million), which took place on Tuesday, marked the first reopening of the seventh series of 2023 Treasury Bonds, launched on 8 August and which on that date brought in 475 million meticais (€6.8 million).

The issue ended up not reaching the maximum amount allowed, but the overall demand for the reopening was 1,531 million meticais (€22 million), “with the demand and supply ratio being 306.20 per cent, with a minimum rate of 17.750 per cent and a maximum of 21.500 per cent,” according to the BVM note on the operation.

“According to the state’s cut-off rate, the value of the reopening was 481 million meticais [6.9 million euros],” adds the note on the operation, adding that the bonds have a maturity of five years and a fixed interest rate of 17%.

With this operation, Mozambique has already placed 25,401 million meticais (€366.2 million) in Treasury Bonds through the stock exchange since January, with the legal authority to issue a further 11,247 million meticais (€162.1 million) by the end of the year.

According to decree 14/2023, issued by the Ministry of Economy and Finance on 18 January, the issue of treasury bonds (OT) – public debt issued with longer maturities – for this year provides for an overall limit of 36,648 million meticais (€526.4 million), preferably in two monthly issues, up until 5 December.

Data from the BVM compiled by Lusa indicates that 13 issues have already been made – including reopenings of scheduled issues – so far in 2023, with maturities of up to 10 years and interest ranging from 17% to 19%, and with almost 70% of the legal limit for OT debt for this year now reached.

The amounts raised in each operation ranged from 475 million meticais (€6.8 million) on 8 August to the 5,946 million meticais (€85.3 million) raised in the operation held on 7 March.

Figures previously published by Lusa, based on the budget execution reports for the first quarter, show that Mozambique’s current domestic debt totalled almost 295.733 billion meticais (€4.2 billion) on 31 March, in the form of Treasury Bonds and Treasury Bills – that is, debt with shorter maturities.

Mozambique’s government 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 currently 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 will be to “prioritise the issue of long-maturity treasury bonds.”

Source: Lusa