19 February 2013

Tanzania: High Yield Attracts Treasury Bills Investors

HIGH yield rates above the annual headline inflation have attracted massive investments into the 12-month treasury bills, which were oversubscribed by almost three times.

According to the National Bureau of Statistics (NBS), annual Headline Inflation Rate for January this year decreased to 10.9 per cent from 12.1 per cent recorded in December 2012. However, the overall index went up to 138.26 last January from 124.64 recorded in the corresponding period in 2012.

Food and Non alcoholic beverages Inflation rate declined to 11.9 per cent in the period under review from 13.1 per cent recorded in December last year. In the East African Region, Kenya's inflation rate in the month under review increased slightly to 3.67 per cent from 3.20 per cent while Uganda's declined to 4.90 per cent from 5.30 per cent in the previous month.

The auction results posted by the Bank of Tanzania (BoT) last week show that the average yields to maturity increased slightly to 13.59 per cent compared to 13.42 per cent offered in the previous market session. Despite the oversubscription of 360.94bn/- against the 135bn/- offered by the Bank, successful amount was 234.06bn/-.

Interest rate for the 364-day tenor dipped to 14.15 per cent from 14.60 per cent of the previous session but didn't deter buyers from oversubscribing by 223.97bn/- against the only 45bn/- offered in the market. Apart from the slight decline of the rate of return for the 182-day offer to 13.57 per cent compared to 13.84 per cent of the previous market, the total amount tendered jumped to 86.31bn/- against 45bn/- set forth for tendering.

Similarly, a slight increase in the yield rate to 11.98 per cent from 11.82 per cent for the 91-day tenor, total amount tendered was under subscribed to 35.65bn/- against 40bn/- offered in the market. Also apart from the reduced interest rate to 6.75 per cent from 6.80 per cent for the 35- day offer, total amount tendered jumped to 15bn/- compared to only 5bn/- put for bidding.

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