Tight liquidity affects T-bonds auction

The five-year maturity bonds auction on Wednesday received minimal investments as compared to the previous session largely due to tight liquidity in the market.

According to the auction results posted by the Bank of Tanzania (BoT) the five years treasury bonds attracted a total of 23 bids of which 21 were successful. 

However, despite the oversubscription, the government ended up taking 40bn/- offered for bidding.

The situation explains that few bidders’ offered were below the market price that could be expensive for the BoT at the payback period.

A thin oversubscription came despite slight increase of the yield rate to 14.99 per cent, compared to 14.38 per cent of the previous market session, a sign of continued tight liquidity in the market. Liquidity tightening is one of the monetary policies applied by the Central Bank to regulate and curb inflation in the market.

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. Treasury bills and bonds are among the instruments used by the government to borrow from the public.

During February this year, the stock of domestic debt amounted to 5.26tri/- compared to 5.15tri/-recorded in January 2013. The increase was due to the new issuance of government securities that outweighed maturing obligations.

Domestic debt stock by instrument shows that government bonds accounted for 73.8 percent followed by Treasury bills at 21.1 percent. 

During the reviewed month, commercial banks were the largest holders of the government domestic debt accounting for 45.6 percent of the domestic debt, followed by the BoT at 27.8 percent
Source: The Daily News, reported from Dar es Salaam
Share on Google Plus

About Abduel Elinaza

This is a short description in the author block about the author. You edit it by entering text in the "Biographical Info" field in the user admin panel.