Seven-year T-bonds traded low

All 16 bids received in the seven years bonds auction on Wednesday emerged successful in a trade deal that became undersubscribed by 6.13bn/-, equivalent to 30.6 per cent low.

According to the auction results by the Bank of Tanzania (BoT), a total of 20bn/- was offered to the market for bidding but only 13.86bn/- was subscribed and accepted by the government.

Despite improved liquidity in the circulation, investors’ participation in the seven-year government paper deal was small, the fact that some analysts attribute to outstanding performance of the listed firms at the Dar es Salaam bourse.

“The trend shows most investors in the government papers have reversed to invest in the stocks with outstanding performance at the bourse that gives assurance of 100 per cent returns compared to the debt instruments with yields pegged around seven per cent and 15 per cent only,” noted market analyst who preferred anonymity.

Also, the decline of the weighted average yield to maturity to 15.6 per cent compared to 15.7 per cent of the previous session explain the reason for the under subscription of the paper.

The BoT monthly economic review for July this year shows that the profile of domestic debt stock by instruments is dominated by the government bonds accounting for 74.1 per cent followed by Treasury bills which accounted for 21.2 per cent.

 Analysis of commercial banks continued to be the largest holders of the government domestic debt holding 45.9 per cent followed by the BoT at 25.9 per cent.

Lending is one of the core businesses of almost all banks thus where returns are attractive, hefty investments is being injected.

Other investors apart from commercial banks, the Pension Funds, insurance and few micro-finance institutions are among the key investment players in the instruments.

The government said during the 2012/13 fiscal year that it will continue with its arrangement to borrow from domestic market for financing development projects and paying for rollover of maturing treasury bills and bonds.
Source: Daily News, reported from Dar es Salaam, Tanzania
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.