BOU bond sale may receive mixed reception

Dec 02, 2013

APPETITE for a three-year bond due to be auctioned in Uganda this week is expected to be healthy, while that for a 15-year instrument being offered at the same time may be muted

APPETITE for a three-year bond due to be auctioned in Uganda this week is expected to be healthy, while that for a 15-year instrument being offered at the same time may be muted.

Tight liquidity is likely to curb demand for Treasury bills in Kenya.

UGANDA

Uganda's bond sale this week, its last scheduled sale of the year, is likely to receive a mixed reception as the central bank offers the popular three-year bond alongside the less sought after 15-year paper.

The Bank of Uganda will sell 80 billion shillings each in the three- and 15-year issues on December 4.

Low appetite is expected for the latter, with demand mainly from pension funds.

"The three-year will be well received. There's quite a bit of money in the system," said a trader. "The 15-year, I don't think the reception will be that great given the tenor."

The yield on the three-year bond is likely to remain at current levels of 14-14.5 percent, where it is currently trading on the secondary market, the trader said.

KENYA

Kenyan Treasury bill yields are expected to hold steady this week as tight liquidity curbs investor appetite.

The central bank will auction 91-, 182-and 364-day Treasury bills worth a total 9 billion shillings.

At last week's sale, the weighted average yield on the 91-day Treasury bill fell to 9.760 percent from 9.816 percent last week.

The yield on the 182-day Treasury bills fell to 10.473 percent from 10.515 percent previously, while that on the 364-day also fell to 10.835 percent from 10.939 percent the previous week.

"For now the auctions are lacklustre. They are not really attracting significant interest. And that is partly because the market remains tight, and also banks are gearing up for end of year," Joshua Anene, trader at Commercial Bank of Africa, said.

Reuters

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