T-bills defy norms, record oversubscription

Despite the month-end obligations, the twelve-month Treasury Bills auctioned by the Bank of Tanzania (BoT) attracted great interest from investors, leading to oversubscription of 6.3 per cent.

The auction results show that the total amount tendered jumped to 154.3bn/- against the 145bn/- that the central bank had sought at an average interest rate of 14.49 per cent, slightly higher than the previous auction’s 14.46 per cent.

Apart from the oversubscription, successful bids were 139.9bn/-, a sign that some investors offered price below the market value.

It is common for investors to fulfil 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, a sign of improved liquidity in circulation.

The bank report underscores further that there was a higher appetite for 364-day bills but there was no appetite for 35 day. The total amount tendered for the 364-day offer was 61.92bn/- against the 55bn/- initially sought at interest rates of 15.31 per cent, up from the previous 14.9 per cent.

The 182 day offer was subscribed to 50.5bn/- against the 45bn/- offered for tendering at a rate of return of 15.15 per cent compared to 14.61 per cent of the preceding session.

Likewise, total amount tendered for the 91 day offer was 41.8bn/- against 40bn/- placed for tendering at 12.6 per cent rate of return compared to 12.4 per cent of the previous market.

There was no appetite for the 35 days offer. Commercial banks have remained the main investors in government securities, contributing over 60 per cent of the total market share.

Pension Funds, insurance and few micro-finance institutions firms are among the key investment players in the instruments as well.
Source: Daily News, reported by Sebastian Mrindoko , 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.