Bank of Tanzania relaxes muscle on T-Bills

BoT Head Quarter 
The Bank of Tanzania (BoT) has relaxed its stance on Treasury Bills and accepted more during last week’s auction, which was oversubscribed by almost 17 per cent.

The central bank wanted to mop-out 100bn/- in circulation but ended up accepting 116.67bn/-.   A change of policy was due to the fact that the rates were low in favour of the bank. 

The bidders, despite low yield return across the board compared to the previous auction, offered 148.55bn/- in total.   

The 364-day Treasury Bills weighted average yield, dropped to 12.38 from 12.45 per cent from the previous auction, while its average price stands at 89/01.

The 182-day yield also slipped to 12.26 from 12.33 per cent with a piece selling at 94/24.  The 91 and 35 days bills were also not spared when their prices and yield rates crushed to 11.74 from 11.78 and 5.24 per cent with the prices pegged at 97/16 and 99/50 respectively. 

According to Tanzania Securities Business Analyst Joel Nkya, the central bank has decided to borrow more than its initial target because most bidders offered prices which are favourable.   

Commenting on the declining yield rates on the Treasury Bills, Mr Nkya said there would be a drop due to easing of the central bank’s liquidity policy.

On the other hand, Standard Chartered Bank said last week that the auction of the bill remains to be seen as a positive sentiment after the central bank maintained its size at 100bn/-.   

 “We expect over subscription and the curve to decline between 100 to 150 basic points,” the bank predicted last week.   

 Nevertheless, the oversubscription will likely affect the interbank money market due to increased activities as banks meet their obligations to settle settlement for the Treasury Bills.

This is the second time this year, the central bank has accepted more than the projected auction amount.   Mid last month, the bank also accepted 146.7bn/- out of 273.2bn/- tendered during the auction which was to raise 100bn/-.
Source: The Daily News,www.dailynews.co.tz, reported by Abduel Elinaza
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