21 December 2012

Tanzania: Demand for T-Bills Dwindles

A ONE-YEAR Treasury Bill was on Wednesday undersubscribed by 28bn/- in an auction through which the central bank sought to raise 135bn/- but received bids for only 106bn/-.

Financial analysts say the situation is a reflection of a slightly tighter liquidity. According to the Bank of Tanzania auction summary, only 153 bids worth 106bn/- out of the total 170 bids received were successful. The government however ended up taking only 86.46bn/-.

The NMB said in its e-market report yesterday that, "The 135bn/- worth of T-Bills offered by the BoT on Wednesday was undersubscribed by 28bn/-, with the weighted average yield up by 13.32 per cent from 12.39 per cent, reflecting a slightly tighter liquidity," Barclays Bank said in its e-market report.

"In a reversal trend, the auction was undersubscribed, an indication that the central bank's efforts to reduce excess liquidity in the market have been successful." The bank report stated further that, the 35-day paper dropped by 3 basis points from the last auction when interest rates on all other tenors hiked with the highest recorded on the 364-day paper which rose by 43 basis points.

The BoT auction results show that 10bn/- was offered for the 35-day paper but only 1.5bn/- was tendered at 6.98 per cent interest, a decline from 7.01 per cent of the previous treasury bills auction conducted early this month.

The 91-day tenor was under subscribed by 27.84bn/- against 40bn/- offered to the market for tendering at 11.92 per cent yield, slightly higher than 11.87 per cent of the preceding auction. Similarly, the 182-day paper was under subscribed by 11.81bn/- against 40bn/- put on offer at a yield rate of 13.12 per cent, which is slightly above the 12.79 per cent interest of the previous market.

However, the 364-day tenor was over subscribed by 19.17bn/- where the BoT offered 45bn/- for tendering at 13.9 per cent interest above the 13.47 per cent of the preceding auction.

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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