Demand for T.Bills soars by sh247b
DEMAND for Treasury Bills (TBs) has soared with the central bank’s March 25 auction oversubscribed by sh247b, highlighting high level of liquidity in the market.
By Sylvia Juuko
DEMAND for Treasury Bills (TBs) has soared with the central bank’s March 25 auction oversubscribed by sh247b, highlighting high level of liquidity in the market.
The Bank of Uganda (BOU) report showed that the auction attracted bids totalling sh317b against an offer of sh70b.
“It’s market forces at play. As long as the liquidity situation prevails, we are going to continue seeing a lot of demand.
“This will exert downward pressure on interest rates,†a banking official explained.
The average discount rate for the 91-day Treasury Bills fell to 6.38% from the 7.701% recorded in the previous auction.
The trend was similar with the 182-day TBs in which it fell to 9.474% from 11.126% and the 364-day, which declined to 10.574% from 11.261%.
“It’s clear that there is excess liquidity in the market, coupled with unsatisfied demand.
This has pushed oversubscription to the levels we have not seen in the past,†said the official.
The highest level of demand was recorded on the shorter end of the market highlighted by a high bid to cover ratio of 8.231.
It attracted bids totalling sh57.6b against the sh7b on offer.
“This is the second time that an auction has seen massive oversubscription since the BOU resumed the auctions after it cancelled one at the beginning of the year due to liquidity crunch that characterised the market.
The auction held on March 11 was also oversubscribed by sh178.75b.
Yields for the TBs were recorded at 6.662 for the 91-days, 10.192 for the 182 days and 11.822 for the 364 days Treasury Bills.
The next Treasury Bill auction is scheduled for April 8
DEMAND for Treasury Bills (TBs) has soared with the central bank’s March 25 auction oversubscribed by sh247b, highlighting high level of liquidity in the market.
The Bank of Uganda (BOU) report showed that the auction attracted bids totalling sh317b against an offer of sh70b.
“It’s market forces at play. As long as the liquidity situation prevails, we are going to continue seeing a lot of demand.
“This will exert downward pressure on interest rates,†a banking official explained.
The average discount rate for the 91-day Treasury Bills fell to 6.38% from the 7.701% recorded in the previous auction.
The trend was similar with the 182-day TBs in which it fell to 9.474% from 11.126% and the 364-day, which declined to 10.574% from 11.261%.
“It’s clear that there is excess liquidity in the market, coupled with unsatisfied demand.
This has pushed oversubscription to the levels we have not seen in the past,†said the official.
The highest level of demand was recorded on the shorter end of the market highlighted by a high bid to cover ratio of 8.231.
It attracted bids totalling sh57.6b against the sh7b on offer.
“This is the second time that an auction has seen massive oversubscription since the BOU resumed the auctions after it cancelled one at the beginning of the year due to liquidity crunch that characterised the market.
The auction held on March 11 was also oversubscribed by sh178.75b.
Yields for the TBs were recorded at 6.662 for the 91-days, 10.192 for the 182 days and 11.822 for the 364 days Treasury Bills.
The next Treasury Bill auction is scheduled for April 8