Govt papers continue to attract investors

Long-term government securities continued to attract massive investments as witnessed by the 5-year Treasury bond auctioned  on Wednesday last week, that hooked 63.8bn/- up from only 43bn/- planned to be mobilised.

According to the Bank of Tanzania (BoT) auction conducted last week, the oversubscription signifies the reigning favourable liquidity situation in circulation pushing investors to search for investment opportunities.

"This week's Treasury bond auction indicated improved liquidity conditions as investors showed appetite beyond the offered amount.

"We anticipate seeing similar reflection on a seven-year bond in the next auction," remarked the Tanzania Securities Limited (TSL) in its weekly market commentary.

Apart from favourable liquidity in the market, improved returns on the five-year bond that edged high slightly compared to the previous tender, contributed to the oversubscription.

However, despite the oversubscription, the successful amount was 43bn/- sought to be raised.An over-subscription situation is a clear indication that investors were awash with cash which is disproportionate with the available investment opportunities.

"The yield on a five-year treasury bond edged slightly higher at auction on Wednesday to 14.53 per cent from 14.49 per cent at a previous auction in September," commented the NMB e-markets reports.

The Standard Chartered Bank in its Market Commentary said the yield for 5-year rose slightly by 4 basis points to 14.53 per cent with cut-off coming lower at 15.04 per cent from 15.15 per cent. Also 16 out of 23 number of bids received emerged successful.

"The auction was well received primarily driven by commercial banks with 1.46 times oversubscription and a 70 per cent success rate for the bidders," remarked the Standard Chartered Bank Daily Market Commentary.

In the secondary market, bonds worth 28.25bn/- were transacted during the week for the 5-year maturities being higher than the previous period's bonds which were valued 10.5bn/- for the 5-year and 10-year government papers.

In the trading, banks were the key players trading on both profit taking and portfolio building as yields indicated mixed results.

Over 60 per cent of the key players of long term maturities are commercial banks, with only five per cent as retail investors.Others are pension funds, insurance companies and a few micro-finance institutions.
Source: The Daily News,, in Dar es Salaam
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