HIGH demand greeted the two treasury bonds auctioned by the Bank of Tanzania (BoT) on Wednesday closing the trading session oversubscribed.
The outstanding performance of the 24 months debt instrument sends an implication of improved liquidity among investors of the bond.
This is the first two years treasury bonds to be auctioned this year greeted by high investors' appetite compared to the two years instrument auctioned in the corresponding period last year.
The number of bids received during the trading session was 143 out of which 78 emerged to be successful bids.
The two years government instrument attracted bids worth 279.9bn/- as total amount tendered against 137bn/-offered to the market for bidding.
However, the government retained 167bn/-as successful amount despite the oversubscription.
The 10.26 per cent coupon rate was offered in the 2-year instrument held on Wednesday slightly down compared to 11.08 per cent of the session held in August last year.
The weighted average yield to maturity declined slightly to 8.17 per cent compared to 8.29 per cent of the previous session that took place in August last year.
According to BoT, stable exchange and inflation rates are among the major factors that make the two years treasury bonds to be attractive to investors.
Apart from retail investors, others are commercial banks, pension funds, insurance companies and some microfinance institutions.
The government raises funds through the two years Treasury bonds and other debt instrument to fund the long term projects that will start generating income before the instrument matures.
Some of the long term infrastructural projects that benefit from the funds include hydropower, roads, railways, bridges, ports, airports as well as social services like hospitals and schools.
The implementation of the projects would stimulate business growth, contribute to improved living standards and the government collects more revenue.