Cash-strapped Zimbabwe fails to sell T-bills again

Tue Nov 6, 2012 2:46pm GMT

By Nelson Banya

HARARE (Reuters) - Zimbabwe failed to sell treasury bills for the third time in around a month on Tuesday, traders said, as wary banks brushed off government pressure to help revive the domestic debt market.

Cash-strapped Zimbabwe is trying to relaunch its T-bill market but has seen little interest from commercial banks, which are demanding hefty yields to hold the short-term debt.

The central bank had said in private meetings it would garnish money from foreign lenders as punishment for refusing to buy the bills, one banker familiar with the matter told Reuters.

Dealers said Tuesday's $30 million offering of 91-day bills attracted just $8.65 million worth of bids, with yields ranging from 8.5 to 12 percent.

The government relaunched the treasury bill market last month but has managed just one successful auction in four attempts -- selling $9.85 billion on October 26.

In the run-up to the latest planned issue, Finance Minister Tendai Biti had leaned on the country's major banks.

"I am giving the banking sector the last chance to fully support the treasury bills. If they don't support it, I will issue NCDs and that's it," Biti was quoted by the Herald newspaper as saying.

NCDs, or negotiable certificates of deposit, are a form of a savings instrument issued by banks for big deposits and are transferable, and therefore tradable in the secondary market.   Continued...

Zimbabwe's central bank Governor Gideon Gono gestures during a news conference at his office in Harare February 20, 2009. REUTERS/Philimon Bulawayo
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