5 February 2013

Tanzania: T-Bills Continue to Attract Many Investors

TOTAL amount tendered in the one-year treasury bills conducted last week more than doubled to Sh282.07 billion despite slight decline in yields, an indication of an improved liquidity condition in the market.

The auction results posted by the Bank of Tanzania (BoT) show that yields for the 35, 91 and 182-days eased down except for the 364-days which recorded a slight increase of 0.97 per cent. "This week's T-Bill auction indicated improved liquidity conditions as investors showed appetite on all investment day's tenor.

"Preference was more on the 182-days maturity and the 364-days maturity," stated the Tanzania Securities Limited (TSL) weekly market commentary. However, apart from the oversubscription the successful bids were 113.22bn/-, a sign that most investors tendered below the bidding price that could be expensive for the BoT at the payback period.

The average interest rates declined to 13.42 per cent compared to 14.31 per cent of the previous session, which is equivalent to 0.89 per cent change. Yields for the 364 days offer made a slight increase to 14.60 per cent compared 14.46 per cent offered in the preceding market thus managing to hook bids worth 163.03bn/- against 45bn/- put by the Bank for tendering.

Interest rates for the 182 tenor declined to 13.84 per cent compared to 14 per cent of the earlier session, thus hooking bids valued at 89.07bn/- against 40bn/- offered for tendering. The rate of return for the 91 days dipped slightly to 11.82 per cent compared to 11.98 per cent of the preceding market and it was under subscribed to 24.47bn/- against 35bn/- placed for tendering by the Bank.

Likewise, yield rates for the 35 days offer fell to 6.8 per cent compared to 7.03 per cent of the previous session with total amount tendered of 5.5bn/- against 5bn/- offered for tendering. 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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