BoT okays Treasury Bills oversubscribed by 173bn/

BoT Governor Prof Benno Ndulu
The Bank of Tanzania (BoT) has accepted 46 per cent more than the amount it announced for sale on Wednesday as investors oversubscribed the Treasury Bills by 173.2/- at an affordable cost.

On Monday, the central bank floated Treasury Bills worth 100bn/-but it accepted 146.7bn/- out of 273.2bn/- tendered during the auction.

It is the first time the BoT has received more than its target in 2012, although recent trends have seen investors oversubscribe government securities while the weighted average yields have slowed down.

Securities market analysts say this is because It is the first time the BoT has received more than its target in 2012, although recent trends have seen investors oversubscribe government securities while the weighted average yields have slowed down.

 “It is a fact that the government is in financial problems,” says Mr Joel Nkya, an analyst with Tanzania Securities.  “I think they have decided to borrow more than their target because most bidders bid at prices which are within their acceptable ranges.”

According to Mr Nkya, the rates are going down due to easing of government liquidity policy.

“Repo rates have gone down, a factor that has increased supply of money in the economy,” he adds. “With excess supply, rates ought to go down as they are doing now.”

The weighted average yields continued to drop for all maturities compared with the previous sale. The yields for the 364-day maturity slowed from 15.30 per cent on February 1st, 2012, to 12.45 per cent on Wednesday while the 182-day maturity dropped from 16.21 per cent to 13.33 per cent.

The 91-day maturity yield also decreased from 13.18 per cent previously to 11.78 per cent on Wednesday and the 35-day maturity slightly declined from 7.73 per cent to 7.31 per cent.

Tanzania Securities CEO, Moremi Marwa, said it is normal for the central bank to take more than the amount it offers for sale if the investors bid at a  lower cost.

However, the central bank accepts more than its amount offered when there is a high demand for the money,” he explains.

“Currently, investors are bidding at lower rates because they are confident that inflation rate is going down.” The inflation rate slightly dropped in January to 19.7 per cent from 19.8 per cent recorded in December.
Source: The Citizen,www.thecitizen.co.tz, reported by Alawi Masare

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