No change in T.Bills yields
Jun 28, 2010
YIELDS for government securities will remain stable over the next few months due to minimal participation of foreign investors in the market, a top official said recently.
By Sylvia Juuko
YIELDS for government securities will remain stable over the next few months due to minimal participation of foreign investors in the market, a top official said recently.
“The outlook for the coming financial year is that yields on government securities will remain within the current range. “We do not expect heavy recovery in Europe, which will trigger offshore investor demand for the securities,†said Adam Mugume, the Central Bank’s director for research.
The outlook comes against a background of the Central Bank’s increase in Treasury bill auction offers from sh60b at the beginning of the year to the current sh90b in line with increased aggregate demand and a step up in government spending plans.
“In the beginning of the year, the Government was not spending that much but towards the end of the financial year, government spending has stabilised, while donor flows have increased.
“This explains the increase in issuance,†Mugume explained. The increase in issuance will allow the Central Bank mop up excess liquidity in the market.
Most of the auctions have been oversubscribed, highlighting the high level of demand for the securities. The June 16 auction was oversubscribed by sh226.09b, with about sh90b on offer.
Yields on government securities inched up with the June 16 auction registering 4.422%, 5.806%, and 7.643% for the 91-day, 182-day and 364-day compared to 4.320, 5.780 and 7.931 respectively from the previous auction.
The annualised discount rates were at 4.304% for the 91-day, 5.565% for the 182-day and 7.101% for the 364-day in the June 16 auction.
The slight rise in yields on government securities was a departure from the trend that saw downwards movement, in line with Central Bank’s easing monetary policy as it attempted to boost aggregate demand.
The debt markets registered outflows at the height of the global economic downturn when offshore investors liquidated their holdings in government securities and exchanged shillings for dollars to cover positions at home.
However, Mugume said some offshore investors have since returned, though the developments in the global market may result in heightened risk aversion from emerging markets like Uganda.
“We do not expect to see a heavy shift in yields. They will remain in current range.â€
YIELDS for government securities will remain stable over the next few months due to minimal participation of foreign investors in the market, a top official said recently.
“The outlook for the coming financial year is that yields on government securities will remain within the current range. “We do not expect heavy recovery in Europe, which will trigger offshore investor demand for the securities,†said Adam Mugume, the Central Bank’s director for research.
The outlook comes against a background of the Central Bank’s increase in Treasury bill auction offers from sh60b at the beginning of the year to the current sh90b in line with increased aggregate demand and a step up in government spending plans.
“In the beginning of the year, the Government was not spending that much but towards the end of the financial year, government spending has stabilised, while donor flows have increased.
“This explains the increase in issuance,†Mugume explained. The increase in issuance will allow the Central Bank mop up excess liquidity in the market.
Most of the auctions have been oversubscribed, highlighting the high level of demand for the securities. The June 16 auction was oversubscribed by sh226.09b, with about sh90b on offer.
Yields on government securities inched up with the June 16 auction registering 4.422%, 5.806%, and 7.643% for the 91-day, 182-day and 364-day compared to 4.320, 5.780 and 7.931 respectively from the previous auction.
The annualised discount rates were at 4.304% for the 91-day, 5.565% for the 182-day and 7.101% for the 364-day in the June 16 auction.
The slight rise in yields on government securities was a departure from the trend that saw downwards movement, in line with Central Bank’s easing monetary policy as it attempted to boost aggregate demand.
The debt markets registered outflows at the height of the global economic downturn when offshore investors liquidated their holdings in government securities and exchanged shillings for dollars to cover positions at home.
However, Mugume said some offshore investors have since returned, though the developments in the global market may result in heightened risk aversion from emerging markets like Uganda.
“We do not expect to see a heavy shift in yields. They will remain in current range.â€