10-year bond starts the New Year strongly

Funds raised from the long term government note are used to finance infrastructure projects and settle some maturing debts. Out of the 109 bids received only 46 emerged successful, a clear indication that some investors’ bidding price was high for the government to pay at maturities.

The highest bid offered at the auction was 95.43 while the minimum bid/100 was 70.00. The minimum successful price/100 was 79.82 and the weighted average price for successful bids was 81.46. Also, the weighted average yield to maturity was 15.08 per cent slightly lower than 15.89 per cent of the previous sale of 10 years treasury bonds auctioned in October last year.

As prices fall, yield rates head north. On the other hand, the weighted average coupon yield rate was 14.04 per cent down from 14.66 per cent of the preceding sale of the 10 years bond. The long term and short term maturities have continued to capture investors’ attention and participation, signaling a possible high level of liquidity in the circulation.

Some of the key local investors in the long term government paper are commercial banks, insurance companies, pension funds and some microfinance institutions.

SOURCE: DAILY NEWS

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