The Government is Broke and Has Issued 365 Day Treasury Bills
The reserve bank of Zimbabwe has released an issue of 365 days Treasury bills to all Banks.
RBZ invites all Commercials Banks, societies, POSB and IDBZ to subscribe to Treasury Bills amounting to One Hundred and Fifty million dollars (ZWL$150,000,000-00).
RBZ notes that all Applications must be a minimum amount of One million Zimbabwe dollars (ZWL$150,000,000-00). The number of bids pr investo are restricted to two (2) and of the copies of the application forms are available from RBZ Local Dealers,80 Samora Michel Avenue, Harare. Applications should be clearly marked”Zimbabwean 365 Day Treasury Bills”.
Quick insight about treasury bills.
Treasury Bills are short-dated securities used by the government when borrowing from the market. They are issued by the Reserve Bank on behalf of the government and their tenor is generally 91 days. Through investing in Treasury Bills, clients earn fair returns at minimum risk since the securities are government-backed. And these use an open market operations (OMO) auction system where bids are entertained and offer made.
Advantages of issuing TBs
It provides Government with liquidity, allows the Government to restructure debt from short term to long term. It aides debt management and default on TBs is minimal thus it is kind of security to the lender though performance could be delayed. It is legal to issue TBs and commercially viable due to its cost-effectiveness.
Generally, TBs are considered risky free and liquid.
Below is the issue: