BOZ Just Changed Zambia's Bond Market Forever — Here's What Every GRZ Bond Investor Must Know

The GRZ bond market changes in 2026 are the most significant restructuring of Zambia's domestic bond market in years. On 31 March 2026, the Bank of Zambia issued a Public Notice announcing four specific changes — all taking effect in the second quarter of 2026. If you invest in GRZ bonds, or are planning to, every one of these changes affects how you invest, when you invest, and how much you can invest.

Change 1 New Benchmark Bond Designations

Every BOZ bond prospectus divides bonds into two categories: benchmark bonds and non-benchmark bonds. Benchmark bonds are bonds that BOZ can reopen — that is, reissue under the same reference number (ISIN) in future auctions, growing the outstanding volume on that bond over time. Non-benchmark bonds are one-time issuances: once issued, the volume is fixed until maturity and BOZ will not reopen them.

The reason this matters is liquidity. A bond with large outstanding volume trades more actively on the secondary market, which means you can buy or sell it more easily and at a fairer price. Benchmark bonds are the ones the market uses as pricing references. They are the bonds institutional investors — banks, pension funds, insurance companies — actively trade.

For the past several years, the benchmark bonds in Zambia were the 3-year, 5-year and 10-year. The 2-year, 7-year and 15-year were non-benchmark — issued in smaller, fixed amounts with limited secondary market activity. Effective April 2026, BOZ has changed this completely.

Source: BOZ Bond Prospectus 03/2024/BA, 06/2025/BA (prior designations); BOZ Public Notice 31 March 2026 (new designations). Verified from boz.zm.

The BOZ notice also sets a minimum outstanding target of K10 billion per benchmark bond line. To reach that target, BOZ will reopen benchmark bonds — meaning the same bond, same ISIN, same maturity date — in repeated auctions rather than issuing fresh bonds each time. Reopenings of benchmark bonds will commence in April 2026.

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Change 2 Revised Auction Frequency

Until the end of Q1 2026, government bond auctions were held once per month — twelve auctions per year. From the second quarter of 2026, this changes to twice per quarter, which is eight auctions per year. Treasury bill auctions are not affected — they continue to be held fortnightly as before.

The Q2 2026 bond auction dates are already confirmed: Friday 24 April 2026 and Friday 26 June 2026. BOZ will continue to publish its quarterly auction calendar in advance so investors can plan accordingly.

The shift from twelve to eight auctions per year means there are now fewer windows at which you can enter the bond market. Instead of a new opportunity every four weeks, you are looking at roughly one opportunity every six to seven weeks. This requires more deliberate cash planning — you cannot wait and assume another auction is just around the corner. If you miss a window, you wait.

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Change 3 Revised Auction Sizes

The amount of bonds on offer at each auction is also changing. From Q2 2026, the total bond offer per auction increases from K4.2 billion to K6.3 billion — a 50% increase. Treasury bill auction sizes remain unchanged at K2.2 billion per fortnightly auction.

Sources: BOZ Quarterly Issuance Calendars Q4 2024 through Q1 2026; BOZ Public Notice 31 March 2026.

To put this in perspective: at the February 2026 auction, BOZ offered K4.2 billion and received K21.3 billion in bids — the market was over five times subscribed. With larger auction sizes, more allocation is available to investors at each event. The non-competitive window — where smaller investors accept the market rate without bidding their own yield — is 10% of the total offer, which means K630 million is reserved for non-competitive bidders at each Q2 auction, up from K420 million in Q1.

Both the K6.3 billion bond auction size and the K2.2 billion Treasury bill size are set in line with the Government of the Republic of Zambia's 2026 Annual Borrowing Plan, which targets gross domestic borrowing of K106 billion for the year.

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Change 4 Introduction of Liability Management Operations

This is the most technical of the four changes but carries significant implications for investors who hold older bonds. In Q2 2026, the Government will introduce Liability Management Operations (LMOs). In plain language: holders of selected existing bonds will be given the option to exchange their old bonds for new benchmark bonds before their original maturity date.

To understand why this matters, consider the context. Between 2020 and 2024, BOZ issued bonds monthly across multiple tenors, creating a large number of small, individual bond lines — each with its own ISIN, its own maturity date, and its own thin pool of holders. Many of these legacy bonds are illiquid because the outstanding volume on each line is small. Investors who hold them cannot easily sell them on the secondary market.

LMOs are designed to clean up this fragmented bond stock. By inviting holders of these legacy bonds to exchange into the new, larger benchmark bond lines, BOZ simultaneously gives those investors an exit route and builds the volume of benchmark bonds toward the K10 billion target. The BOZ notice confirms that the effective date and full modalities — including which bonds will be eligible for exchange — will be announced in June 2026.

Participation in LMOs is entirely voluntary. If you hold a legacy bond and are satisfied holding it to maturity and collecting your coupons, you are under no obligation to participate. However, if you hold a bond with low secondary market liquidity and would like to exchange it for a more actively traded benchmark bond, the LMO mechanism will give you a structured, government-supported way to do that. The terms of the exchange — including what coupon you will receive on the new benchmark bond — will only be known once BOZ publishes the full LMO modalities in June.

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Key Dates to Put in Your Calendar

Frequently Asked Questions

Want to Understand Benchmark Bonds from the Beginning?

If you would like a full explanation of what benchmark and non-benchmark bonds are — including how reopenings work, how to read a BOZ bond prospectus, and how to calculate your return — watch this episode of Ndalama Insights from 2022. The foundational concepts are still exactly as explained there.