Maputo, Oct. 10, 2024 (Lusa) - Mozambique this week placed 5.727 billion meticais (€82 million) of five-year Treasury Bonds (OTs) in a domestic stock market issue, according to official data to which Lusa had access on Thursday.
According to information from the Mozambique Stock Exchange (BVM), the operation took place on Monday and the bids submitted by the Specialised Treasury Bond Operators point to a ratio of demand to supply of 89.54%, "with the total demand having been allocated."
In this issue of OTs, the 11th series of 2024, for direct subscription by specialised operators, the placement was authorised of up to €6.396 million meticais (€91.6 million), with a fixed nominal interest rate of 14.70%.
The document also explains that the issue is part of the exchange of the 10th OT issue of 2020.
This month the Bank of Mozambique recognised the problem of high domestic public indebtedness, which has already grown by 90.3 billion meticais (€1.269 billion) this year.
"The pressure on domestic public debt remains high," read the statement released after the ordinary meeting of the central bank's Monetary Policy Committee (CPMO) on 30 September. "Domestic public indebtedness, excluding loan and lease contracts and overdue liabilities, stands at 402.7 billion meticais" - that is, €5.659 billion.
The same note from the CPMO, a body that meets every two months, emphasises that the current level of domestic debt "represents an increase of 90.3 billion meticais compared to December 2023."
The domestic public debt issued by Mozambique had reached 364.251 billion meticais (€5.117 billion) in May, after growing by the equivalent of €730 million in the first five months of 2024, according to previous data from the central bank.
In April, the 2023 public debt from Mozambique's Ministry of Economy and Finance's report warned of the pace of growth in domestic debt, which, if it continues, threatens the process of reversing progress in reducing overall debt unsustainability.
As interest rates on shorter-term Treasury Bills (BTs) and OTs "have risen, the cost of domestic financing has been driving a continuous upward adjustment of the weighted average interest rate on the government's loan portfolio," the report noted.
The lending rate went from "5% in 2021 to 5.8% in 2022 and now 6.5 % in 2023, making a cumulative increase of 150 basis points in two years," it recalls, also warning that the "refinancing risk, reflected in the growing concentration of maturities" of public debt "in the short term horizon, represents the greatest vulnerability."
Cumulative domestic debt at 31 December 2023 amounted to the equivalent of $4.9113 billion (€4.616 billion), with the weight of BT issues in the total stock of debt rising to 9% last year from 4% in 2019, while that of OTs doubled to 16% over the same period.
PVJ/ARO // ARO.
Lusa
