26 November 2012

Tanzania: Liquidity U.S T-Bills Investment

Sufficient liquidity has continued to push massive investments in treasury bills despite the unchanged yield rates.

The auction results released by the Bank of Tanzania (BoT) show that the government had sought to mobilize $84.37m (Tsh135bn) but ended taking $105.26m (Tsh168.43bn) although the paper became oversubscribed to $124.53m (Tsh199.24bn).

"The T-Bills auction on Wednesday saw insignificant interest rate change across all tenors as six months rate remain unchanged, 35 and 91 days bills dropped by 37 and 17 basis points respectively while one year bill increased by 25 basis points," remarked the Barclays Bank market report.

The average yield to maturity for the treasury bills auctioned on Wednesday last week was 12.27% compared to 12.57% of the previous tendered conducted early this month.

Comparatively, treasury bills auction conducted in the same period last year fetched premium weighted average yield to maturity 15.22% because the Central Bank had applied tight liquidity measures to contain top flying inflation that saw liquidity level in the market dipping.

The BoT uses tight liquidity stance is one of the instruments applied to contain inflation rate that has risen to the point of biting the size of investment in the money markets as well as holding back the country's economic performances.

The 364 days offer was oversubscribed by $26.67m (Tsh42.68bn) compared to only $28.13m (Tsh45bn) offered into the market for tendering, at a yield rate of 13.43%, a bit higher than returns of 13.18% of the previous t-bills auction.

The government ended up taking $44.55m (Tsh71.29bn) out of $54.8m (Tsh87.68bn), total amount tendered.

In 182-day tenor, $25m (Tsh40bn) was offered to the market for tendering at 12.86% interest, same as the rates in the previous trading, but government ended up by accepting $33.58m (Tsh53.73bn) although total amount tendered jumped as high to $41.35m (Tsh66.16bn).

However, the trade saw the 91-day offer being undersubscribed by $10.37m (Tsh16.60bn) at 11.76% rate, down from 11.98% yield of the previous market and the government accepted only $14.31m (Tsh22.90bn) out of $14.63m (Tsh23.40bn) total amount tendered although the government sought to generate $25m (Tsh40bn).

But the 35 days tenor was overly subscribed to $13.75m (Tsh22bn) at 7.25% yield against only 6.25m (Tsh10bn) offered for tendering and the government ended up taking $12.81m (Tsh20.50bn).

Pension Funds and commercial banks remain giant investors in government securities contributing above 60% of the market share. Others are insurance and a few micro-finance institutions among the key investment players in the instruments.

Ads by Google

Copyright © 2012 East African Business Week. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.