Investors shun long-term T-bills

The seven-year bond auctioned by the Bank of Tanzania (BoT) failed to attract investors in the long term papers, recording a 19 per cent under subscription beyond expectations of the market analysts who had forecast full subscription.

The auction summary posted by the central bank shows that the weighted average to maturity dropped slightly to 15.2 per cent, compared to 15.6 per cent of the 7-year bond maturities auctioned in the previous session.

“BoT auctions 10.08 per cent coupon, 7-year 55bn/- bond and the expectation is that the auction will be fully subscribed as investors look for duration,” remarked the Standard Chartered Bank in its daily Market Commentary.

A total of 55bn/- was offered for bidding but only 44.48bn/- mobilised in the 7-year bond with BoT, taking up 35.78bn/- as successful amount, an indication that most investors offered prices that were below the market price. 

The number of bids received was 15, but only three sailed through.

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. 

Tight liquidity is one of the BoT monetary policy instruments used to tame inflation.

The government in the 2012/13 fiscal year continued with its arrangement to borrow from domestic market to finance development projects and pay for rollover of maturing treasury bills and bonds.
Source: The Daily News, reported from Dar es Salaam
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