Investors jostle for treasury bills

The Treasury bills were last week oversubscribed by about 57 per cent, despite investors’ end of the month obligations. 

According to the auction results posted by the Bank of Tanzania (BoT), the amount tendered rose to 227.37bn/- compared to 145bn/- offered to the market, an indication of improved liquidity level in the circulation.

Interest rates across all tenors increased significantly compared to the previous session, the situation that may have hooked massive investments in the short term instruments.

The weighted average yield to maturity for instance increased to 15.35 per cent from 14.96 per cent of the previous auction two weeks ago. 

However, apart from the oversubscription, only 124 bids out of the total 266 succeeded, generating 130bn/-, a clear indication that some investors offered price below the market value.

It is common for investors to fulfill month end obligations, including payments of tax liabilities, salaries and other statutory payments, cutting down the available funds for investments in government papers. But, the outcome of the auction exhibits the contrary as the government papers were oversubscribed.

The bank report shows that there was a higher appetite for 364-day bills that attracted bids worth 109.85bn/- against the 55bn/- initially sought at interest rates of 15.96 per cent, up from the previous 15.31 per cent.

The 182 day offer was oversubscribed to 76.11bn/- against the 45bn/- offered for tendering at a rate of return of 15.86 per cent compared to 15.75 per cent of the preceding session. 

However, the total amount tendered for the 91 day offer became undersubscribed to 37.9bn/- against 40bn/- placed for tendering at 13.8 per cent rate of return compared to 13.06 per cent of the previous market.

Contrary to the previous auction, the 35 day tenor hooked bids worth 3.5bn/- against 5bn/- offered for tendering. Commercial banks have remained the main investors in government securities, contributing over 60 per cent of the total market share.
Source: Daily News, reported from Dar es Salaam, Tanzania

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