Yields on last 2021 Treasury bills auction rise

Yields on last 2021 Treasury bills auction rise

TREASURY bills’ average yields climbed yesterday following a poor demand that sent prices lower to trigger northward price movement. The debt market analysts predicted the yields gain for the last T-bills that went under the hammer yesterday— albeit slightly—following a poor demand for the 10-year T-bond last Wednesday.

However, only two bills—182 days and 364 days—were traded while the remaining two—35days and 91 days—were canceled after investors absconded them. Vertex International Securities predicted in its weekly market review that the yields were likely to go up after 10 years bond yields went down to disappoint investors.

“We expect yields to increase in the [this] week auction for Treasury bills,” Vertex said. The 182 and 364 days bills prices went down slightly to 98/26 and 95/26 from 98/28 and 95/35 respectively. The price descending pushes up yields due to the inverse relationship between price and yields on debt instruments.

Thus the two bills’ average yields went up albeit slightly to 3.55 per cent and 4.99 per cent from 3.51 per cent and 4.89 per cent respectively. Also, the Central Bank (BoT) sought to raise 3.0bn/- for a 182-day bill but was terribly undersubscribed since investors tendered 1.0bn/- instead. The bank took all amount tendered.

The offer on the table for the 364 days bill was 72.7bn/- but the public tendered 64.6bn/- the central bank took 64.551bn/-. Mid-last week BoT reopened a 10-year 11.44 per cent T-bond primary auction looking to borrow 133.33bn/- . The market bid prices were ranging between 96/75 to as high as 107/- worth 53.22bn/- , an under subscription by 80bn/-.

BoT, despite the under subscription, took 49.32bn/- only with a cut-off price of 101/12, signalling monetary authorities’ reluctance to let yields rise, according to Orbit Securities weekly market synopsis. Due to price rise, the yield to maturity fell 35 basis points to 11.25per cent compared to 11.60per cent recorded when the bond was originally issued in March with a more or similar tender size also being highly undersubscribed.

According to BoT, during the March auction, 36.03bn was received and BoT accepted only 2.01bn/-. “Surprisingly,” Vertex said, “yields continue to decrease”. The auction results for 10 –year T-bond were underwhelming as the bond was undersubscribed by a huge margin.

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