APA-Bissau (Guinea Bissau) Creditors offered only 19.160 billion of the 20 billion sought by Guinea-Bissau in its third issue of the year on the public securities market, representing a bid-to-cover ratio of 191.60 percent%.
Guinea-Bissau’s simultaneous issue of Bons Assimilables du Tresor (equivalent treasury bills, BAT) with maturities of 182 and 364 days, for a total amount of CFA 20 billion, on Tuesday February 13, 2024, did not thrill investors.
The order book (or global number of bids) representing the envelope proposed by investors stood at 10.865 billion CFA francs for the 182-day BAT, and 8.295 billion CFA francs for the 364-day BAT.
Compared with the initial target of 20 billion CFA francs, the operation’s coverage rate (of the amount put up for auction) came to 191.60 percent, reflecting mild market enthusiasm.
In view of these bids, Guinea-Bissau chose to retain only 5.705 billion CFA francs for the 182-day BAT, i.e. an absorption rate of 52.51 percent, and 5.295 billion CFA francs for the 364-day BAT, i.e. an absorption rate of 63.83 percent.
In fact, the country rejected all proposals with interest rates in excess of 8.75 percent, the marginal rate, for the first BAT, and 9.16 percent for the second, surely taking into account its debt targets.
For investors, the weighted average yield or average return on allocated funds is 9.08 percent for the six-month BAT, and 9.57 percent for the twelve-month BAT. In other words, investors will receive an average of 9.08 percent and 9.57 percent interest for their investments. At these rates, Guinea-Bissau is borrowing much more
expensively than at its last issue on the 6-month maturity, for which it obtained a weighted average yield of 8.71 percent.
In addition, the six-month issue attracted investors from Benin (with bids of 2.2 billion CFA francs), Burkina Faso and Côte d’Ivoire (with bids of 632 million CFA francs and two billion CFA francs, respectively), Senegal and Togo (with bids of 1.533 billion CFA francs and 4.5 billion CFA francs, respectively).
These same countries, with the exception of Togo, also submitted bids of 4.1 billion CFA francs, 191 million CFA francs, two billion CFA francs and 2.004 billion CFA francs, respectively for the 12-month BAT.
ARD/te/fss/as/APA