The Bank of Botswana (BoB) raised P770 million in debt for government from the capital market in the final auction of 2023, with strong oversubscription by bidders.
Two Treasury Bills (T-Bill) were offered in the December 29 auction which capped a period in which the central bank has seen declining yields for the notes it has been floating. The three-month bill, which offered P400 million, received bids worth P1.2 billion, with P300 million ultimately being allocated by the BoB.
The six-month T-Bill offered P370 million and received bids of P1.26 billion, with P470 million ultimately allocated. Yields at the auction eased, with the stop-out yield for the three-month dropping to 3.76% from 4.37% at the November auction. The stop out yield on the six-month T-Bill eased to 4.04% from 4.55% in November.
The stop-out yield is the highest yield an issuer, such as the BoB is willing to pay on the notes. The downtrend in yields seen in the second half of the year has also come with higher allotments at the auctions the central bank has been holding on behalf of government.
he latest trend is a sharp turnaround from the prolonged period of under-allotment and rising yields that greeted government’s decision to double its domestic debt programme to P30 billion in September 2020. The BoB has attributed the latest trend to declining inflation and an influx of capital in the local market due to changes to pension fund rules.
