Republic of Mauritius- Bank of Mauritius to issue Treasury Certificates for Non-Financial Public Sector Bodies

The TCs will be opened for investment exclusively by NFPSBs and will provide an opportunity to these bodies to directly invest their temporary surplus cash balances in an instrument of maturities that will meet their cash flow requirements. NFPSBs may also invest their surplus funds in traditional Government securities through the secondary market.

This initiative will confer various benefits to public sector bodies. Indeed, investment in Government securities generally yields higher returns as compared to bank deposits of similar maturities. Government securities are risk-free financial instruments and are therefore the most secured type of investment. Moreover, investment in Government instruments will encourage the development of the market for Government securities and will contribute in improving public sector cash management.

Key features of the new investment mechanism

The key features and the mechanism for investment in this new instrument are:

The issuance will be in book entry format. The maturities will be for 91 days, 182 days and 364 days. To facilitate submission of bids by NFPSBs, the issue will be made at par. Bids will be for a minimum of Rs 100,000 and in multiples of Rs 50,000. Interest on the TCs will be paid at maturity or on encashment.

• Mechanism for Investment in Treasury Certificates

An account in Book Entry Form will have to be opened by each NFPSB at the BOM for recording of the TCs. Tenders for issuance of TCs for will be made on a fortnightly basis on Monday.

Invitation for bids will be posted on the website of the BOM and bids will have to be submitted electronically on a set format to a secured email address at the BOM. Allocation will be made by the existing Allocation Committee for Government Securities on the basis of bid amounts and maturities preferred by the market. The Allocation Committee will reserve the right to issue an amount higher than the tender amount.

• Investment in Traditional Government Securities

NFPSBs can also invest in traditional Government of Mauritius securities through the secondary market. There are currently four registered primary dealers that are authorised to buy Government securities on the primary market and trade them on the secondary market.

The four Primary Dealers are the State Bank of Mauritius Ltd, the Mauritius Commercial Bank Ltd, Barclays Ltd, and Afrasia Ltd.