5 March 2018

Tanzania: Seven Year-Bond Attracts Twice Amount Needed

SEVEN years bond auction by the Bank of Tanzania (BoT) last Wednesday received high investors' attention that resulted into an over subscription by over two times.

The bank's auction summary shows that the debt instrument attracted bids worth 230.9bn/- compared to 100bn/- sought to be raised. Despite the over subscription, the government retained the amount worth 150bn/-.

The government uses the debt instrument for raising funds for implementing long term projects investment like road and railway infrastructure development. Investors continue to use substantial amount in investing in the risk free debt instrument, an initiative that has for long affected the growth of credit to the private sector.

Other investors in the treasury bills auction are pension funds and some micro finance institutions. The weighted average yield to maturity declined to 12.9 per cent from 13.97 per cent of the previous session held in December and 14.98 per cent held in October.

Despite the fall in yield rate, investors' appetite for the government note remained high.

The weighted average coupon yield declined to 11.5 per cent from 12.15 per cent and 12.73 per cent of the preceding two sessions of December and October respectively. Weighted average price for successful bids was 87.01 compared to 82.92 whereas the minimum successful price/100 was 84.54.

The lowest and highest bids /100 were 97.00 and 77.36 respectively.


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