19 April 2017

Tanzania: High Investors Demand Greets Five Year Treasury Bonds Auction

Demand for the five-year treasury bonds was high in an auction attracting bids worth 143.58bn/-, which is an oversubscription compared to the preceding session held in February, this year.

The auction results by the Bank of Tanzania (BoT) in a show held last week indicate that a total of 86 out of 119 bids received emerged successful. At the end, the government retained 105bn/- as successful that was sought to be raised in the auction. The weighted average yield to maturity increased to 17.92 per cent from 17.68 per cent of the previous session held in February, this year.

The weighted average coupon yield was 12.77 per cent compared to 12.66 per cent of the auction in February. Weighted average price for successful bids was 71.86 compared to 72.49 of the preceding session. Minimum successful price/100 was 70.67 compared to 71.00 held in the session before.

The highest and lowest bids/100 were 74.26 and 65.56 respectively. Yields may stabilise as more funds are chasing government papers as well as continued decline in inflation.

Treasury bonds are among the instrument used by the government to borrow from the public for various development projects. Some of the key players of long term maturities are commercial banks, with only five per cent as retail investors. Others are pension funds, insurance companies and a few microfinance institutions.

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