IMPROVED liquidity in the local money market has increased demand for one year treasury bills, with the government papers oversubscribed to 210bn/- against the 145bn/- that the central bank had sought to raise.
According to the Bank of Tanzania (BoT) auction results, the end of month obligations did not deter investors from injecting substantial investments into the short term government paper.
It is common that most investors fulfill end of month obligations including the disbursement of tax, salary and other statutory payments, cutting down the share of investments in the government papers.
Also a slight decline of the weighted average interest yield to 15 per cent from 15.26 of the previous auction was not a reason enough to discourage investors.
The bank report states further that there was a higher appetite for 364-day bills but there was no appetite for 35-day bills. The total amount tendered for the 364-day offer was 108.42bn/- compared to 45bn/- initially sought at interest rates of 15.48 per cent.
The 182 day offer was oversubscribed to 64.37bn/- against the 50bn/- offered for tendering at a rate of return of 15.45 per cent. Likewise, total amount tendered for the 91 day offer was 37.29bn/- against 45bn/- placed for tendering at 13.6 per cent rate of return.
There was no appetite for the 35 days offer. Rate of return has been one of the major determinants in drawing attention of investors' appetite on the treasury bills auction although in some past tenders, little changes were noticed despite hiked interest rates leading to under subscription.
Commercial banks have remained the major investors in government securities, contributing over 60 per cent of the total market share.
Pension Funds, insurance and few micro-finance institutions firms are among the key investment players in the instruments was sufficient with interest rates following a similar trend from the previous week.