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Bank of Zambia Announces Change in Issuance Method for Government Bonds

The Bank of Zambia has declared a modification in the issuance procedure for the Government of the Republic of Zambia bonds (GRZ bonds), slated to take effect from January 2024. 

This adjustment entails the issuance of new GRZ bonds at par in the primary market, signifying a departure from the current approach to government securities.

Under the new directive, Government bonds will be sold at their face value, meaning the cash amount invested will align with the face value amount. 

The coupon rate for each instrument will be determined during the auction process, with the respective highest accepted yield rate serving as the coupon rate.

The decision to adopt issuance at par aims to streamline Government debt metrics and enhance overall debt service efficiency. This change is expected to provide greater clarity in the bond issuance process and facilitate a more straightforward approach to pricing in the primary market.

It’s important to note that re-issuances of existing bonds and secondary trading may still occur at discount, par, or premium based on prevailing market conditions. This flexibility allows for adaptability to the dynamic nature of financial markets.

The Bank of Zambia encourages the General Public and all investors in Government securities to take note of this transition. 

For those seeking more information or requiring clarification, they are advised to contact the Director of Financial Markets at the Bank of Zambia.

This strategic adjustment in the issuance method reflects the ongoing efforts to refine financial mechanisms and ensure the efficiency of Zambia’s debt management. 

Investors and financial stakeholders are urged to stay informed and engage with the Bank of Zambia for any further details or inquiries.

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