Treasury Bills (T-bills) rates on all three tenors have gone up after at least two months of softening, a situation analysts have attributed to a renewed demand for government securities.
Results of the T-bills auction last week show the overall rejection rate of 2.2 percent with government raising K9 billion against total applications of K9.2 billion and over-subscription of 2.3 percent.
The T-bills rate for 91-days tenor, mostly the determinant of interest rate direction, jumped to 12.99 percent from 11.75 percent with the 182-days tenor up to 13.20 percent from the previous week’s 12.42 percent.
However, the 364-days tenors which increased slightly the previous week went down last week to 17.81 percent from 18.50 percent, signifying investors’ lukewarm response to long-term borrowing.
Despite the rates rising in the short-term tenors, they are still below inflation rate currently at 24.6 percent as of February, according to National Statistical Office (NSO), meaning that investors are still recording negative returns.
Last week, analyst noted that T-bills market was fast losing its allure of some few months ago largely due to fiscal authorities’ stance to check on borrowing, pushing yields to levels below the inflation rate.
Last year, between February and March, the average yield on all the three tenors was above 40 percent.
It got better because the inflation rate at that time was around 36 percent; hence the margins were way above the inflation rate.