Apetite for govt securities remains high

BoT. HQ in Dar
The latest Treasury Bills (TBs) auction has been oversubscribed by 38.86bn/- or 35.32 per cent, reflecting excess liquidity in the domestic market.
The Bank of Tanzania (BoT) auction results of the tender conducted on Wednesday this week show that a sum of 110bn/- was sought to be mobilised, but the government ended colleting 117.79bn/-.
"Surprisingly the appetite for 35-day tenor was revived after two months of no interest, with the rate jumping from 4.24 per cent to 8.63 per cent," stated the Barclays Bank Market Report. 

The 35-day offer was oversubscribed by 7bn/- compared to only 5bn/- offered for tendering.

The yield curve has shifted upwards across the three tenors with exception of one-year tenor which had the highest demand with the average interest rate set at 13.07 per cent. The yield curve declined on the longer end by 29 basis points spread as forecast.

The BoT has been applying tight liquidity measures to contain inflation rate that has been affecting the amount of investment in  money markets.

Yields for this bucket spiked by 439 basis points from 4.24 per cent to 8.63 per cent with a cut-off as high as 10 per cent. There was also a minor spike of 14 and 35 basis points for 91 and 182 days respectively.

The 91-day offer was undersubscribed and BoT was forced to take all  bids that were submitted. Overall, the auction was well received indicating improved liquidity conditions.

The 364 days offer was oversubscribed to 72.20bn/- while the Bank wanted to raise only 40bn/-. However the settlement worth 102bn/- was expected to be disbursed yesterday for the matured securities.

Pension Funds and commercial banks remain giant investors in government securities contributing above 60 per cent of the market share. 

Others are insurance and a few micro-finance institutions among the key investment players in the instruments.
Source: The Daily News,http://www.dailynews.co.tz, reported by Sebastian Mrindoko  in Dar es Salaam
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