Ten-year bond exhibits improved liquidity

The ten-year Treasury bond was received relatively well on Wednesday, with investors oversubscribing by 37.73 per cent, an indication of improved liquidity in the market.

The Bank of Tanzania (BoT) wanted to raise 29.5bn/- from the 10 year-bond that had a price tag of 14.5 per cent as coupon rate, but the market tendered 40.63bn/-.

Despite the oversubscription, BoT accepted 29.5bn/- offered to the market for bidding, an indication that some investors offered price below market value.

Investors’ appetite for the 10-year Treasury bond was not prevented by the slight fall of the weighted average to maturity to 14.5 per cent compared to 15.3 per cent offered in the previous ten-year government paper.

The government papers are among the debt instruments the state uses to borrow money from the public for financing of various development projects. The stock of domestic debt at the end of June 2013 stood at 5.64tr/-, an increase of 1.4bn/- from the level recorded at the end of preceding month.

On annual basis, domestic debt stock increased by 1.46tr/- from 4.17tr/- recorded at the end of June 2012. The profile of domestic debt stock by instruments shows that government bonds accounted for 74.1 per cent, with the treasury bills accounting for 21.2 per cent.

Commercial banks continued to be the largest holders of the government domestic debt, holding 45.9 per cent followed by the central bank at 25.9 per cent.

Over 60 per cent of the key players of long term maturities are commercial banks, with only five per cent being retail investors. Others are pension funds, insurance companies and few micro-finance institutions.
Source: Daily News, reported by Sebastian Mrindoko, from Dar es Salaam, Tanzania
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