Rates on Government of Jamaica Treasury bills hit their lowest level since November 2022 in this week’s auction for $2.2 billion in three tranches, due to mature in August and November this year and February 2024, resulting in rates on all three dipping under 8 percent.
The three months bill fell to 7.823 percent at this week’s auction, the lowest since November 2022, when the average rate came in at 7.96 percent. The six months instrument’s previous low of 7.96 percent in September last year came in at 7.975 percent at the recent auction and is also down from 8.32 percent in April this year. The nine months rate of 8.2 percent in July last year and 8.36 percent in April this year fell to 7.999 percent this week.
The auction saw $8.9 billion going after the three issues on the same day that $27 billion, when after the CDs that Bank of Jamaica offered, resulted in CDs rate falling under 8 percent.
Treasury bill rates dip under 8%
Treasury bill rates continue to fall
Treasury bill rates in Jamaica continues to fall with the two latest issues of 91 and 182 days duration declining with the 91 days instrument falling to an average of 4.176 percent while the 182 days fell to 4.635 percent.
The December decline, is the eight time in 2017, that the rates have fallen. Two amounts of $600 million each were offered to investors and $4 billion chased after them, with the longer dated issue attracting just over 56 percent of the total. The trend suggests that rates on the longer term instrument should fall below 4 percent in early 2018.
The effect of downward movement of rates goes much further than just the money market. Stocks and real estate investments are set to rise in value as a result of the continuing fall in rates and mortgages rates should fall as well.
Treasury bill rates heading to 4%
Treasury bill rates dropped sharply again in the latest Government of Jamaica’s October auction. Rates on the 182 days instrument, fell 34 basis points to 5.11 percent having dived 53 basis points to 5.45 percent in September.
The 91 days Treasury bill rate, fell 40 basis points from 4.98 percent in September to 4.58 percent in the latest auction. In September the rate dropped 51 basis points. The attached chart shows the resistance levels going back to early 2016 just below the 6 percent level that lent support to the rates until June when rates started to drift slowly downwards and was decisively broken in September on its way to 4 percent.
Tbill rates in sharp drop
Interest rates are falling with the Treasury rates falling sharply in the latest auction last week.
Rates fell by 53 basis points for the 182 days Treasury bills, the most since June 2014 when it fell by 57 basis points.
The average rate fell to 5.45 percent, the lowest level since 2012 and broke decisively, the resistance level at just under 6 percent and seems set to reach just around 4 percent before too long. Investors pumped $2.63 billion into the auction for the $600 million on offer. At the same time $3 billion chased $600 million offered for 91 days, with the average rate falling to 4.985 percent from 5.49 percent in August. The decline for the 91 days instrument, is the third fall since the rate rose modestly in June, to 5.77 percent and the sixth monthly decline for 2017. The fall in the rates better aligns them with the central bank’s new overnight reference rate.
April T-Bill cacelled as GOJ cash surges
Regular issue of Treasury bills would normally be held by the 19th of April but none were offered this time around based on the absence of an announcement by the Central Bank of Jamaica.
When the last issue of Treasury bill closed on Friday, 15 March 2017, the Bank of Jamaica stated that applications for the next offer of Government of Jamaica Treasury Bills must be lodged at the Bank of Jamaica by 10:45 a.m. on Wednesday, 19 April 2017. Bank of Jamaica acting on behalf of the government would make an announcement of the date and amounts for the upcoming issue. The website of Bank of Jamaica carries information when the public is being offered news bills and the result of the issue, a check on the site throws no information on the April issue, with no announcement no explanation for cancelation of the issue.
At the end of February, data out of the Ministry of Finance showed a budgetary surplus of $17.5 billion in revenues above forecast and a cash deficit of $5.5 billion. With March projected to generate large net inflows of revenues over outflows, the central government would not need to borrow from the financial market. Inflows was projected at $72 billion and expenditure at $35 billion for March, if achieved would result in a surplus of $30 billion for the financial year.
Stocks shrug off interest rate rise
The latest issue of Treasury bill offerings saw the 182 instrument climbing 40 basis points to 6.2 percent while the 91 days T-bill rose marginally to virtually hold at 5.70 percent just a tad above the average in October.
The 28 day T-bill slipped from 5.78 percent to 5.70 percent. At the same time the main market All Jamaica Composite index continues to climb with some companies posting good increased profits.
The rise in the 192 days instrument comes against the back drop of stability in the exchange rate for November to date, very low inflation that seems headed to around than 2 percent for 2016. The change in rates also comes against the change in Bank of Jamaica policy to offer Certificate of Deposits daily to the market to bid on.
T-bills spurned by investors
Investors spurned the latest issues of treasury bills with two of the four offerings for the month being heavily under subscribed and with the yields rising, albeit modestly.
All four issues had offerings of $400 million each but while the 30 days instrument received bids of $474,943,600 and ended with a yield of 5.37 percent the same level as the previous issue, the 91 days received $508,470,400 at a yield that rose from 5.65 percent to 5.80 percent, the 181 days received just 366,081,700 with the yield rising from 5.82 percent to 5.91 percent and the nine months instrument saw just $167,987,400 and enjoyed an average yield of 6.414 percent.
The rates are slightly ahead of the Bank of Jamaica’s 30 days CD rate of 5.25 percent which has been in place since 2016. With inflation for the first four months of the year at negative 1.7 percent it seems that the central Bank’s inflation target of 5.5 percent is far too high and should be adjusted down and with it a lowering in the CD rate.
Interest rates drop
Interest rates payable on the latest round of Treasury bill instrument offered by the Government of Jamaica, declined but the 28 days instrument plummeted by 50 basis points to 5.54 percent from 6.04 percent out come at the January auction.
The 182 days instrument fell by 21 basis points to 5.73 percent but the 91 days instrument climbed back above the 6 percent mark to end at 6 percent, up from 5.94 percent in January.
Treasury bill Interest rates are coming from a high of 9.11 percent on the 182 days instrument, in March 2014 and has been falling since. The latest rates are the lowest since the early 1980s.
The issues were for a total of $400 million each, with the 28 days instrument attracting $569,799,800, the 91 days one pulling in only $418,580,000 and the 182 days instrument attracting $671,724,700.
Investors rebuff T-bill offer
The Treasury bills offer that closed on Wednesday saw investors rebuffing the government offering by refusing to bid for the full amount of $400 million offered to mature on Friday, 11 September 2015.
This is the first that this has happened for some time. Investors placed bids for only $305,006,100 for the $400 million offered while the government took up $305,005,500 but at a slightly higher rate of 6.2552 percent than obtained at the July auction. At the July auction the average was 6.217 percent. Full allotment was made for bids with yields ranging between 6 percent and 6.5 percent.
In June 2013 investors rebuffed government’s the 90 days and 182 days offers of Treasury bills. The three months issue that matured on 20 September 2013 for $400 million attracted just $284,330,500 and the six month issue that matured on 20 December 2013 for $400 million but attracted just $201,628,400.
Treasury bill rates fall
At the latest auction for the issue of Treasury bills held today, rates on the 28 days, the 91 days and 182 days bills declined from ay auction, continuing the decent starting March last year.
The latest rate on the 91 days instrument is now at 6.48 down from 6.57 percent at the May auction and the 182 days is now at 6.63 percent, a fall from 6.7 percent. The 28 days instrument ended with a rate of 6.23 percent down from 6.27 percent in May. The rates are far off from the BOJ CD rate of 5.25 percent.
A total of $1.2 billion was available for the public to bid on, split equally between the three issues. The 28 days offering attracted $475 million the 91 days attracted $602 million and the 182 days instrument attracted $828 million. With the interest rates on some of the Jamaican government’s bonds tied to Treasury bill rates, the latest development of lower rates will mean lower cost for the variable rate bonds.
With inflation looking as if it could end 2015 around 3.5 percent Bank of Jamaica may have to intervene by lowering the CD rate to speed up the fall in Treasury bill rates.
