14 January 2014

Tanzania: BoT Reduces T-Bill Tender By 50 Per Cent

THE Bank of Tanzania has slashed down Treasury bill (TB) tender amount by almost a half on the back of tight liquidity as the market seems not yet recovered from the end year festivals.

The amount reduced to 90bn/- from 160bn/- of last year auction, to make the market better and more competitive turnout thus cutting down bid yield rates.

The auction expected to be held tomorrow is the first for the T-bills in this year, but to stay away from yield surging up the central bank reduced the amount.

Bank M's said in a statement that the move was necessitated by the fact that the market had not really recovered from the liquidity squeeze though gradual improvements were being noted.

"This, coupled with the reduced tender amount will likely lead to a better and more competitive turnout with a potential downward effect on yields," the bank said in a statement.

Data show that for the 35 days the amount offered of 5bn/- was the same as that put on auction on the last Wednesday of last year with zero interest rate.

The 91 days the amount was chopped by almost 60 per cent to 15bn/-. The last yield during the last year tender was 13.75 per cent.

The 182 days amount was reduced by almost a half to 30bn/- from 55bn/- while it attracted an interest rate of 15.57 per cent. The last 364 days tender amount was cut down to 40bn/- from 65bn/-.

It attracted the highest interest rate 15.97 per cent. The National Microfinance Bank (NMB) says on the statement that tight money on circulation continued to be felt as interbank transaction was marred by the high interest rate.

"The liquidity tightness is still pronounced in the interbank money market with overnight borrowing rates at the highs of 13 per cent," NMB says in the e-Market statement.

The last T-bill auction was undersubscribed due to what debt money analysts said was to pressure posed by Christmas and New Year festival that haunted investors' participation.

"The New Year's Eve Treasury Bills Auction results were a pure reflection of the liquidity pressure facing the market due to the massive end of the year outflows," Bank M said. The turnout of last December auction of less than 35 per cent was the lowest since July 2013.

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