19 August 2014

Tanzania: T Bills Oversubscribed As Liquidity Improves

IMPROVED liquidity in the circulation coupled with yield rate hike were among the major incentives that made investors to rush for the 12 month treasury bills resulting to oversubscription.

The Bank of Tanzania (BoT) auction summary held last week shows that a total of 135bn/- was offered to the market but at the end it fetched bids worth 143.41bn/-.

The weighted average yield slightly increased to 14.52 per cent compared to 14 per cent of the previous session held two weeks ago. Despite the oversubscription, the bank ended up taking only 109.98bn/- as successful amount.

A total of 115 bids out of the total 144 succeeded, a clear indication that some investors offered price below the market value. The NMB e-markets report states the local money market was fairly liquid with overnight lending rates still at the highs of 13 per cent. The treasury bills auction was little oversubscribed with the weighted average yields changing slightly.

The interbank borrowing eased down from 13.74 per cent to 12.45 per cent during the period under review, as the market started to regain liquidity.

The situation was also depicted from the Treasury bills auction which was oversubscribed. The 364-day offer was oversubscribed to 116.16bn/- against the 55bn/- offered for tendering at a rate of return of 14.72 per cent the same as the rates offered in the previous session.

The bank report shows that there was a low appetite for the 182-day bills that attracted bids worth 22.86bn/- against the 45bn/- initially sought at interest rates of 14.09 per cent, up from the previous yields of 14 per cent.

Similarly the appetite for the 91-day was down to 4.38bn/- against 32bn/- placed for tendering at 12.59 per cent rate of return compared to 12.39 per cent of the previous market. Investors shunned the 35-day tenor where 5bn/- was offered for bidding.


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