Hi Maka,

My views are three fold....

Firstly, there is a strong possibility that the cut off yield will be lower than the 12.96% rate for last month. I saw today's (i.e. 7 March 2011) bond prices and the indicative yield is closer to 12%.

Secondly, one needs to appreciate the fact that the government (or rather CBK) is indeed calling the shots in so far as the interest rates on the treasury bills and/or bonds. I saw they way people were keen on getting yields in excess of 14% last month - only to be disappointed at the end.

Hope this helps.

Hi Maka,

It is true that the interest rates have been on an upward trend for a while. This is due to the fact that the government expects to increase its level of borrowing to finance its activities and operations. It has nothing to do with inflation as one would expect.

The reason that many investors prefer short and medium fixed income investments is largely due to the uncertainity in the movement of interest rates. For instance, the yields for a 364 day treasury bill in late 2007/ early 2008 was around 9%. Compare that to about 4% currently.

Regards

The results are out,bids totaled 29.5 B accepted was 19.8B,the 5 yr picked 10.1 B with an average of 8.50 and cut off 8.99,30 yr average 13.50 cut off 13.99

The Merchant,

CBK today issued an advert for a two year bond and the re-opening of a 15 year bond.

The details are on their website incase you are interested.

Regards