Investors still eye one-year govt papers

Despite shelving yield rates by 0.8 per cent, investors' appetite for the 12 months treasury bills auctioned on Wednesday was high with the note recording more than doubling of the subscriptions.

The Bank of Tanzania (BoT) auction results show that the one-year treasury bills attracted bids worth 301.1bn/- against 135bn/- offered to the market for tendering.

The market behaviour expressed in the trading session implies further improvement and building up of the liquidity level in the economy.

It also explains the situation where there is excessive resources that mismatch the limited investments opportunities.

The trading session witnessed a total of 292 bids entering into competitions but only 46 emerged successful, in the sense that some bidders might have quoted high prices that could be expensive for the Bank to pay at maturity.

However, despite the massive funds attracted to the 12 months treasury bills note, the government ended up taking 107.32bn/- only as successful amount.

The two tenors 364 days and 182 days were very attractive to investors hooking up to 280.8bn/- with the 91 days receiving the remaining amount while investors shunned the 35 days offer.

Yield rate for the 364 days offer were slashed to 14.41 per cent from 14.26 per cent of the previous session while for the 182 days, interest was cut down to 14.36 per cent from 15.19 per cent of the preceding market.

The oversubscription marks the end of the liquidity pressure in circulation that characterised the period of the year end as most investors had to fulfil tax and other domestic obligations.

To make the market better and more competitive during year end period, the BoT cut down the tender amount to 90bn/- from 160bn/- of last year's auction.

The aim of reducing the tender amount was to stay away from yield surging. However, the tendering amount has been restored to the former figure due to improvement of liquidity situation.
Source: Daily News reported by Sebastian Mrindoko from Dar es Salaam, Tanzania
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