The auctioning of treasury bills last week attracted high returns,
hooking massive capital despite the tight liquidity stance.
The government
through the Bank of Tanzania (BoT) auctioned treasury bills worth 70bn/- that
attracted investments worth 103bn/- although successful bids were only 59bn/-.
“The oversubscription was a result of good yields anticipation for
short term government securities as evidenced by the prices quoted,” remarked
the Tanzania Securities in its weekly market commentary. The high interbank rates of about 23.8 per
cent did not discourage the tender from attracting massive investments.
Commercial banks have remained to be the giant investors in government
securities, contributing above 60 per cent of the total market share. The oversubscription, according to analysts
is a sign that investors are awash with cash which do not match investment
opportunities.
Similarly, the acceptance of bids below the amount that the central
bank had sought is one of the monetary strategies to regulate the amount of
money in circulation.
The last auction attracted only 27 per cent application
with only 2 per cent success. This is indication that investors are more
inclined towards short term investments given the inflation situation.
Hiked interest rates to 14.9 per cent for 364 days offer compared to
14.4 per cent of the previous dealing attracted hefty investments of about
59.6bn/- although the government sought to raise only 30bn/-.
For the 182 days offer, rate of return was raised to 13.9 per cent
compared to 13.5 per cent of the last tender and managed to attract investments
worth 38.3bn/- above the sum of 23bn/- sought.
Like in the previous auction, the 91 days offer was under subscribed
and only 6.04bn/- mobilized although the government sought to collect 15bn/-
despite high returns of 13.8 per cent against 13.1 per cent of the preceding
auction.
Source: The Daily News,http://dailynews.co.tz, reported by Sebastian Mrindoko
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