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Stock Exchange: Mozambique Issues $8.6M in Treasury Bonds

Stock Exchange: Mozambique Issues $8.6M in Treasury Bonds

Mozambique this week placed 609 million meticals (8.6 million dollars) in an internal issue of Treasury Bonds with a maturity of five years, the Mozambique Stock Exchange (BVM) said, according to Lusa.

According to the BVM, the operation took place on Tuesday (24) and included bids submitted by operators specialising in Treasury Bonds, with the ratio between demand and supply being 22.51 percent. In total, bids totalling 1.2 million meticals were registered.

This issue corresponds to the 10th series of 2024 Treasury Bonds, intended for direct subscription by specialised operators, with an authorised limit of up to 5.3 million meticals. The nominal interest rate is fixed at 15 per cent for the first four half-yearly interest payments and variable for the last six payments.

According to previous data from the central bank, Mozambique’s domestic public debt totalled 364.2 million meticals, with an equivalent increase of 47.8 billion meticals between December 2023 and May 2024.

The May Economic Situation and Inflation Outlook report details that the domestic debt contracted during this period, excluding other contracts and outstanding liabilities, increased by 51.9 million meticals, representing 23.7 per cent of the Gross Domestic Product (GDP).

The total domestic debt includes 99.8 million meticals in Treasury Bills and 169 million meticals in Treasury Bonds, as well as 95.3 million meticals in advances from the Bank of Mozambique.

The Ministry of Economy and Finance had already warned of the rapid growth of the domestic debt, predicting that if the pace continues, it could reach a balance of 50 per cent between domestic and foreign debt by 2029, a scenario that would jeopardise the chances of reversing its unsustainability.

Interest rates on Treasury Bills and Treasury Bonds have risen, increasing the cost of domestic financing. The weighted average rate on government loans rose from 5 per cent in 2021 to 6.5 per cent in 2023, accumulating an increase of 150 basis points in two years, according to the same report.

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By 31 December 2023, the accumulated domestic debt reached 285 billion meticals. Treasury Bills accounted for 9 per cent of the total domestic debt stock in 2023, while Treasury Bonds doubled their weight to 16 per cent in the same period.

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