14 May 2014

Tanzania: Demand Remains High for 12-Month Govt Bills

INVESTORS have expressed high appetite in the 12-month treasury bills that registered three times oversubscription to 417.62bn/- despite fall in yield rates.

According to the last week's auction by the Bank of Tanzania (BoT), the amount offered for tendering was 135bn/- but at the end of the market session, investors' bids increased by 282.62/-, an indication of high level of liquidity in circulation.

The NMB e-markets report states that the Treasury bills auction held last week was oversubscribed as a result of healthy liquidity in the market. Weighted average yields also went down as expected.

Interest rates across all tenors declined slightly compared to the previous session, but it was not a reason for investors to invest massively in the one-year treasury bills maturities.

The weighted average yield to maturity for instance fell to 12.74 per cent from 13.02 per cent of the previous auction held two weeks ago.

However, apart from the oversubscription, only 115 bids out of the total 256 succeeded, a clear indication that some investors offered price below the market value.

The bank report shows that there was a higher appetite for the 182-day bills that attracted bids worth 183.12bn/- against the 45bn/- initially sought at interest rates of 13.04 per cent, up from the previous yields of 13.26 per cent.

The 364-day offer was oversubscribed to 165.29bn/- against the 55bn/- offered for tendering at a rate of return of 13.02 per cent compared to 13.33 per cent offered in the previous session.

The total amount tendered for the 91-day offer increased to 66.21bn/- against 32bn/- placed for tendering at 11.98 per cent rate of return compared to 12.17 per cent of the previous market.

The 35-day tenor received bids worth 3bn/- at 3bn/- offered to the market for tendering at 7.88 per cent yield rate.

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