T. bills oversubscribed after BoT slash amount

The 12 months treasury bills maturities were received with a high note during the Wednesday auction, thanks to the Bank of Tanzania (BoT) decision to slash down the tender amount to nearly half to cope with the tight liquidity situation in the market.

The auction results show that the short term debt instrument became oversubscribed to 126.4bn/- compared to only 90bn/- offered to the market for tendering.

The outstanding performance on the Wednesday session proved that the BoT decision to reduce the tender amount was effective.

End of year festivals and tax obligations posed liquidity pressure to investors of both short and long term debt instrument, basically used to borrow from the public.

However, apart from an overly subscription the government ended up taking only 119.08bn/- as successful amount. 

Of the bids that competed in the tendering process, 33 out of 42 emerged successful indicating that few investors demanded high returns that could be expensive to pay at maturity period.

Overall, yield rate has continued to be the major determinant of investors’ appetite to the debt instrument and in the one year treasury bills the 364 days tenor managed to hook bids worth 88.03bn/- compared to only 40bn/- offered at 15.26 per cent interest.

The 182 and 91 days tenors became less attractive to investors, leading to undersubscription. They attracted bids worth 23.66bn/- and 14.7bn/-, thus failing to beat the amount offered of 30bn/- and 15bn/- respectively.

As in the previous sessions, investors shunned away from bidding in the 35-day offer, for which the Bank put forward 35bn/- to the market for tendering.

The BoT cut down the tender amount to 90bn/- from 160bn/- of last year auction, to make the market better and more competitive turnout thus cutting down bid yield rates.
Source: Daily News, reported from Dar es Salaam, Tanzania
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