Treasury Bills Remain Attractive

The latest Treasury Bills (TBs) auction has been oversubscribed by 103,760bn/- equivalent to 94.33 per cent, reflecting excess liquidity in the domestic market.

The Bank of Tanzania (BoT) auction results of the auction held on Wednesday last week shows that a sum of 110bn/- sought to be mobilised and the same amount was accepted.

"In the TBs auction, 110bn/- was offered and the same amount was accepted. The auction was oversubscribed by 103.76bn/-.

"Interest rates came off across all tenors with highest decline of 61 basis points for 91-day bucket, remarked Standard Chartered Bank in its daily market commentary.

Surprisingly the appetite for 35-day tenor was up for the second time after a couple of months had elapsed without interest.

In this auction, the rate of return declined slightly to 8.05 per cent from 8.63 per cent. The 35-day offer was oversubscribed by 10.5bn/- compared to only 5bn/- offered for tendering.

The yield curve has shifted downwards across the three tenors with the average interest rate set at 12.68 per cent compared to 13.05 per cent of the previous treasury bills tender.

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.

The 364 days offer was oversubscribed by 49.24bn/- at 14.4 per cent interest rate although the government had sought to mobilise only 40bn/-.

In 182-day tenor, 35bn/- was offered to the market for tendering at 13.13 per cent rate of return, but government ended up by accepting 34.9bn/-despite the oversubscription of 22.28bn/-.

The 91-day offer was oversubscribed by 21.73bn/- planned to be mobilised in the auction.

Pension Funds and commercial banks remained giant investors in government securities contributing above 60 per cent of the market share. Others are insurance and a few micro-finance institutions.
Source: The daily News,http://dailynews.co.tz, reported by Sebastian Mrindoko in Dar es Salaam
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