MANY investors have rushed for Treasury bills that were heavily oversubscribed despite dropping of average yield rates by 0.23 percentage points during the Thursday auction.
Money analysts said the current interbank liquidity helped to support the oversubscription, as tendered amount was 269.99bn/- against 100bn/- the central bank wanted to raise.
However, the Bank of Tanzania only accepted 114bn/- out of total bid amount at an average yield rate of 13 per cent compared to 13.23 of previous market held two weeks ago.
The Zan Securities Chief Executive Officer, Mr Raphael Masumbuko, said the bank accepted more than what it offered signifying the government is on a dare need for funds."This shows that the government needs more funds," Mr Masumbuko said.
He earlier predicted that the T-bill would be oversubscribed as, on average, it pays relatively more than equities and due to the fact that the market has more liquidity.
In mid week auction, the 365 days bill was heavily oversubscribed after investors tendered 125.64bn/- against the offer of 35bn/- while payback was 13.54 per cent. BoT accepted 49bn/-.
It was followed by 91-day bill which was oversubscribed after bidders had put up 76.41bn/- against 30bn/- on offer. But the central bank ended accepting only what was on offer.The 35 and 180 days bills were also oversubscribed but the central bank accepted only 5bn/- and 30bn/- which was on offer.
The Orbit Securities Head of Operations and Dealings, Mr Juventus Simon, earlier said bidders were likely to go for bills as it pays better compared to equities."This demand might drive bills yield rates to decline," Mr Simon said.
National Microfinance Bank (NMB) e-market said the fall of the weighted average yield down to 13 per cent from 13.23 per cent, "reflects liquidity in the market".
The first T-bill auction, which sought to raise the same amount, for government's new fiscal year early this month was oversubscribed by 81 per cent and the central bank accepted 102.75bn/-.
International Monetary Fund (IMF) said yesterday that the country's debt sustainability assessment (DSA) has been updated to reflect new borrowing activities.