Dar es Salaam — TREASURY Bills demand fell short in the first time in 18 months in favour of Treasury Bonds, but the investors have not shifted their attention to other stocks yet.

The low demand came at a time when the bills weighed average yield rose to 3.33 per cent in June from 2.68 per cent registered in the previous month in this year.

The Bank of Tanzania (BoT) offered T-bills worth 240bn/- which is the same amount it had offered for the past two-month but the demand this time was 221.3bn/-, a short fall of almost 8.0 per cent.

BoT indicated in its latest Monthly Economic Review of July that the decline in demand might be associated with the end of year commitments of banks to settle tax obligations of their customers - which peak at quarter ends.

BoT also cited other reasons for low demand as an "increase in preference for Treasury Bonds in the face of low Treasury Bills rates." The Orbit Securities Company Chief Head of Corporate and Research, Mr Fortius Rutabingwa, told the 'Daily News' that despite low demand "T-Bills investors have yet to shift their attention to equity markets."

"There is a need to increase information efficiency of other markets to assist financial planners to invest into high return products," Mr Rutabingwa said. Under normal circumstances low subscription of T-Bills is a good sign for the Dar es Salaam Stock Exchange (DSE), as low government paper yield coupled with low inflation turned to be positive to the bourse.

Dividends yield rate is between 9 and 10 per cent compared to an average of less than 4.0 per cent of T-Bills per year. On top of that withholding tax of equity is only five per cent against 10 per cent of government debt papers.

"May be investors are not ready for long term instruments to slow down index movement at the stock market," Mr Rutabingwa said. The DSE all share index had stagnated at 1174.48 points for the last five days.