The lastest issue of Treasury bills saw a slight slippage in the rates investors will be getting from the government over the next three to six months.
The 6 months issue of Treasury bills maturing in November this year attracted $656.586 million and yielding an average of 6.714 percent, compared with 6.787 percent in April. The the 3 months’ bills are yeilding 6.568 percent versus 6.61 percent in April, the latter auction attracted bids of $655,977,500. Both issues offered bills of $400 million each.
Rates have been sliding on Treasury bills since March last year, there was a slight uptick in the rate out turn at the February auction. The pace of decline of the rates seems to have slowed, in this auction compared with earlier declines. Bank of Jamaica will probably have to lower CD rates to induce a faster decline with inflation for the year still subdued.
Interest rates slip slightly
Treasury-bill rates up
Interest rates on government of Jamaica latest Treasury bills auction rose for the first time since peaking in March last year. The three offerings at the February 20 auctions, resulted in a rise in rates for the 28 days and the 182 days notes, while the rate on the 91 days Treasury bill declined moderately.
The 182 days note closed at 7.164 percent, an increase from 6.99 percent at the January auction. The rate for the 91 days Treasury bills fell to 6.8796 percent, slightly down from of 6.8817 percent in January, while the rate on the 28 days ended at 6.417 percent up, from 6.295 percent at the January auction.
The change in the movement is consistent with the slowing pace of change at which the 182 days treasury rates were falling, having slowed from 0.34 percent dip in November to 0.15 percent at the January issue.
With Bank of Jamaica’s projection for inflation in 2015, in the range of 3-5 percent and with inflation for January coming in at negative 0.5 percent, its unlikely that the latest increase in the rates will last for too long, as there will be lots of room for the treasury rates to decline sharply in the months ahead.
All three instruments offered, were for $400 million each, with demand for the 28 days instrument amounting to $690 million versus $1.15 billion in January. The 91 days instrument attracted $1.298 billion up from $706 million in January and the 182 days instrument pulled in $822 million up from $717 million at the January auction.
Treasury rates at 18 months low
The latest results for Treasury bill auctions, show a decline in the interest rates on all three instruments offered to the public. Importantly, the 182 days note fell to the lowest level, since June 2013, when the rate was 7.12 percent.
At the latest auction dated December 19, 2014, the average rate on 28 days instrument, ended at 6.38 percent. The rate fell from sharply, from 6.71 percent in November and 6.826 percent in October as $686 million chased the $400 million on offer.
Investors, demand for the 91 days Treasury bills offered, continued to climb, dropped to only $531 million from to $1.042 billion for the November auction. Demand for the longer-term 182 days instrument, was for $942 million for the latest auction in which the amounts available was $400 million for all three Treasury bills on offer.
The Treasury bill for the 91 days period, Friday, December 19 to mature on Friday, March 20 next year, attracted an average yield of 6.956 percent a moderate fall from November’s 7.052 percent, and 7.336 percent in October and 7.46952 percent, at the September auction. At the August auction the average rate out turn was 7.46767 percent. The yield for July was an average of 7.63643 percent, for the June issue 7.65893 percent and 8.2 percent in May, for the Treasury bill of same duration.
The offer of 182 days duration, maturing on June 19, 2015, attracted $925 million for the $400 million on offer resulting in an average interest rate yield of 7.14 percent, down from 7.387 percent at the November’s auction. At the October auction the average rate declined to 7.73187 percent from 7.99887 percent, at the September auction, 8.11578 percent, in August, 8.21982 percent at the July’s auction and 8.36502 percent for the June issue, of the same duration. At the May auction, the rate came out at 8.932 percent.
Ja interest rates on slow downward drift
Rates on Government of Jamaica Treasury Bills, have been on a slow drift downwards from levels attained earlier this year. The trend is expected to continue while the rate of exchange for the local dollar, remains fairly stable and inflation is kept under control.
The Treasury bill for the period Friday, August 22 to maturity on Friday, November 21 this year, for the duration of 91 days, attracted bids of $639,068,500, (July $732,981,900) for the $400,000,000 on offer, to yield an average of 7.46767 percent, down from 7.63643 percent average rate out turn in July. The arte for the June issue was 7.65893 percent and in May, the rate was 8.2 percent for the Treasury bill of same duration.
The offer for 182 days duration, matures on February 20 next year and will generate an average interest rate yield of 8.11578 percent down from 8.21982 percent at the July’s auction and 8.36502 percent for the June issue of the same duration. At the May Treasury bill auction, the rate came out was 8.932 percent. $745,290,300 went after the $400 million offered for the latest issue.
New BOJ CDs| At the same time, Bank of Jamaica is offering both US dollar denominated medium term Certificate of deposit instruments and local Jamaica dollar instrument to the market. The US dollar bonds are for an unlimited amount and will pay interest semi-annually.
The offerings are, BOJ FR USD-CD 2018K is for a duration of 4-years at a fixed coupon of 4.50 percent per annum. (ii) The offer of BOJ FR USD-CD 2019G is for 5-years and offers a fixed coupon of 5 percent per annum. (iii) The offer of BOJ FR USD-CD 2021 is for an unlimited amount. The tenor of this instrument is 7-years and offers a fixed coupon of 5.50 percent per annum.
(iv) The offer of BOJ VR-CD 2015AE is for an unlimited amount. The tenor of this instrument is 364-days. The instrument re-prices semi-annually at 0.25 percentage point above the six month GOJ Treasury Bill rate existing at the start of each re-pricing period. The initial coupon for the first six months will therefore be the six month GOJ Treasury Bill rate of 8.12 per cent, plus 0.25 percentage point.
Treasury bill rates edge down
The Government of Jamaica Treasury bill offer for the period Friday, July 25 maturing on Friday, October 24 this year for duration of 91 days, attracted bids of $732,981,900 for the $400,000,000 available.
The yield cane out at an average of 7.63643 percent. The result represents a small reduction from the 7.65893 percent yield, emanating out of the previous issue of a similar duration in June. In May, the rate was 8.2 percent for the Treasury bill of same duration. $832,672,600 went after the 400,000,000 Treasury bill instrument on offer. The offer which is of 182 days duration, matures on January 23 next year and will generate an average interest rate yield of 8.21982 percent versus the 8.36502 percent for the June issue of the same duration. At the May Treasury bill auction, the rate came out was 8.932 percent.
Rising inflation & interest rates affect stocks
Rising interest rates in Ghana is affecting demand for stocks in this West African Country. The country is seeing high levels of inflation with the latest data showing the monthly change rate for February at 1.1 percent, against the 3.9 percent recorded in January 2014 and fiscal deficit that is running around 10 percent of GDP and devaluation of the country’s currency which are influencing investors to demand more interest on savings.
Interest rates which were in the order of 18.5 percent at the end of December last year is now at 23.69 percent for the 91 Days Treasury Bills and is up strongly from end of February at 21.21 percent. The exchange rate has slipped by 18 percent against the United States dollar since the start of the year which has effectively wiped out the gains of 11.24 percent in the main index and 17.14 percent in the financial index for the year to date, in real terms.
In the past week, the Ghana Stock market declined and has been doing so from the week starting February 24 and seems poised to decline some more as buying interest recedes with only 14 bids in the market at the close on Friday March 28 and is down from 19 bids on Wednesday and compared to 23 offers on Friday. For the week only 4 stocks enjoyed price gains and 11 declined compared to 8 rising the week before to 6 that declined.
The Ghana Stock Exchange Composite Index closed the week at 2,386.39 points and was down from 2,388.74 at the end of the previous week and the Ghana Stock Exchange Financial index ended at 2,092.75 points compared to 2,110.94 at the end of the prior week.