Annualized Par Yields on G. Secs:

As of June 28, 2024, the annualized par yields on government securities illustrate a clear upward trajectory for the first four years, starting at 6.75% for a 1-year tenure, 7.00% for 2 years, 7.25% for 3 years, and reaching 7.50% for 4-year bonds. Assuming this pattern remains consistent across longer durations up to 30 years, investors can expect continued increases in yield as the tenure extends. This steep yield curve reflects the typical bond market phenomenon where longer-term investments are rewarded with higher returns to compensate for greater risk and uncertainty over time. Such a yield structure provides valuable insights for financial planning and actuarial analysis, as it helps determine the likely cost of obligations and the valuation of long-term assets for companies and investors considering government securities with up to 30-year maturities.

Insights:

• For more updates, the document refers readers to their website.
• The consultancy is committed to service wherever your business operates.

Interest Rates Around the World:

• Global recessionary uncertainty has resulted in persistent declines in interest rates.

Yield Comparisons:

• Compared to 28-03-2024, rates for every tenure decreased, averaging a drop of 4 basis points (bps).
• Compared to 30-06-2023, average decrease is 17 bps.

Impact on Obligation:

• Decreases in yield will increase the present value of obligations and result in a loss due to changes in financial assumptions, assuming all other variables remain the same.

Impact on Asset:

• A decrease in yield increases the fair value of plan assets whenever a company performs mark-to-market (MTM) valuation.

‍