By zainab.joaque@awokonewspaper.sl
Freetown, SIERRA LEONE – The recent auction results from the Bank of Sierra Leone shed light on the shifting dynamics between short-term and long-term investments in the country’s economy. As Sierra Leone navigates its economic landscape, the Central Bank’s offerings and the market’s response reveal important trends for investors.
On August 8, 2024, the Central Bank made a significant move by offering SLE 442,009,350 for longer-tenor securities compared to just SLE 3,522,800 for shorter-tenors. However, a week later, the auction results reflected a dramatic shift, with SLE 142,713.80 thousand issued for longer tenors and a mere SLE 395.55 thousand for shorter tenors. This stark contrast underscores the varying investor sentiment and strategies in response to the country’s economic conditions.
On August 15, 2024, the Bank of Sierra Leone held a crucial auction for government securities, revealing a mixed but optimistic response from investors despite ongoing economic challenges.
The auction featured two types of Treasury bills: the 182-day and the 364-day. The total issuance for the longer tenor was SLE 142,713.80 thousand, while the shorter tenor saw a modest issuance of SLE 395.55 thousand.
- 182-Day Treasury Bills: Although the issuance was lower, these bills attracted steady interest, with all bids accepted at a uniform rate of 88.00%. The annual yield for these bills was 29.22%, reflecting cautious optimism among investors who are seeking relatively quick returns in a stable environment.
- 364-Day Treasury Bills: The longer-tenor bills saw a much larger issuance, amounting to SLE 142,713.80 thousand, with an annual yield of 41.28%. The highest bid price reached 70.90%, indicating a competitive bidding environment where investors are willing to lock in their capital for a year, despite the risks associated with longer maturities.
The Bank of Sierra Leone held another auction on August 21, 2024, offering a range of government securities that catered to diverse investment preferences.
- 2-Year Treasury Bond: With an issue date of August 20, 2024, and a maturity date of August 18, 2026, this bond was offered at a substantial amount of SLE 53,348,650.00, appealing to investors with a medium-term outlook.
- 91-Day Treasury Bills: For those seeking shorter-term investments, the 91-day bills were offered at SLE 875,000.00, maturing on November 21, 2024.
- 182-Day Treasury Bills: Also issued on August 22, 2024, these bills mature on February 20, 2025, with an offered amount of SLE 875,000.00, balancing short-term liquidity with the potential for higher returns.
- 364-Day Treasury Bills: Targeting long-term investors, these bills, issued on August 22, 2024, mature on August 21, 2025, with a significant offered amount of SLE 340,540,800.00.
- 3-Year Treasury Bond: Rounding out the offerings, this bond, maturing on August 19, 2027, was offered at SLE 40,000,000.00, appealing to those seeking stability and consistent returns over an extended period.
Strategic Implications and Investor Sentiment
The comparison between the recent auction results and the upcoming offerings suggests that the Bank of Sierra Leone is strategically aiming to raise significant funds through the sale of government securities. The substantial amounts offered for the 2-year Treasury Bond and 364-day Treasury Bills, in particular, highlight the Central Bank’s commitment to securing long-term financing.
Moreover, the diversified approach—offering a range of short-term, medium-term, and long-term securities—demonstrates the Central Bank’s efforts to cater to investors with varying risk appetites and investment horizons. This strategy aims to attract a broader pool of investors and ensure the successful sale of government securities, ultimately contributing to the stabilization and growth of Sierra Leone’s economy. ZIJ/26/8/2024
