Bond size reduced, over subscription expected

The Bank of Tanzania (BoT) has reduced by over 50 per cent the amount it need to raise from five-year Treasury Bond, which is scheduled for the auction tomorrow.

 The bond amount was cut to 25bn/- from 40bn/-. BoT gave no reasons for reduction of the size. 

“It remains to be seen as a positive sentiment,” Standard Chartered Bank said in its today money market statement, “we expect over subscription and cut-off at 18 per cent.”

The banks prediction is based on the fact that most trading books will be targeting the bond to add on some risk.

“We expect secondary market to start picking up leading up to this week 5 year bond auction results,” the bank said. 

But analysts said this might be the result of tight liquidity impact that would see the central bank failed to raise the full figure.

At the end of the last y ear the central bank canceled two auctions of five-year bonds due to disagreement with bids from investors who wanted yields that averted the inflation risks. The inflation, stands at 19.8 per cent as at end of December.
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