5 December 2012

Tanzania: Bids for Bonds Fall Slightly Short

THE 10 year Treasury Bonds auctioned last week by the Bank of Tanzania (BoT) were undersubscribed by two per cent with the 15.82 interest rate per cent slightly higher than 15.28 per cent of the previous tender.

According to the BoT auction results, a total of 54bn/- was mobilised out of 55bn/- offered to the market but the government ended by accepting only 50bn/-. "The yield for 10 year rose significantly by 54 basis points to 15.82 per cent with cut-off coming at 17.52 per cent.

The auction was slightly undersubscribed with bids totalling 54bn/- being tendered against the 55bn/- offer," stated the Standard Chartered Bank in its market commentary. In the 10-year tender, only 16 out of 19 bids received emerged successful, an indication that some investors tendered below the price offered at the market by the Bank.

"With a two per cent under subscription, weighted Average Yield to maturity was 15.82 per cent slightly higher than the last 10-Year Treasury bond's auction, which was at 15.28 per cent," the Tanzania Securities Limited (TSL) weekly market commentary stated. According to the BoT report, the auction recorded weighted average price of 78.37 with a minimum price of 71.82 and maximum of 81.41.

Over 60 per cent of the key players of long term maturities are commercial banks, with only five per cent as retail investors. Others are pension funds, insurance companies and a few micro-finance institutions.

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