LUSAKA, Aug 24 – Zambia’s borrowing costs declined in the first local bond auction since the country’s elections, as investors increased their appetite for government debt amid expectations that political continuity will support economic stability and the outlook for Africa’s second-largest copper producer.
Bids for the multi-tenor local-currency bond sale exceeded the 6.3 billion kwacha ($332 million) offered by 37%, according to data published by the Bank of Zambia. The strong demand points to increased investor interest in Zambian government securities following the election.
The seven-year bond attracted the strongest demand among the securities offered. Its yield tightened to 14.79%, representing a decline of 101 basis points from the previous auction in June.
The decline in yields means the government can raise funds at a lower cost than it could at the previous auction, potentially easing pressure on domestic borrowing costs as authorities continue efforts to strengthen public finances.
Investor sentiment towards Zambia has improved as the country emerges from a prolonged period of debt restructuring and sovereign default. The mining sector, particularly copper, remains central to the economic outlook, with Zambia seeking to benefit from strong global demand for the metal used in electric vehicles, power infrastructure and renewable-energy technologies.
The latest auction provides an early indication that investors are becoming more comfortable with Zambia’s post-election policy outlook. Continued demand for government securities could help support the development of the domestic capital market while reducing the cost of financing government operations.
The direction of bond yields in subsequent auctions will provide a clearer indication of whether the improved sentiment represents a sustained repricing of Zambian sovereign risk or a short-term response to the political transition.
