Tanzania's 10-year bond continues to attract investors

The government quest to raise funds for development through issuing of long term debt instruments continued to receive massive support from investors.

Last week, the government through the Bank of Tanzania (BoT) sold the second tenyear bond to be auctioned this year that was over-subscribed by 33.66 per cent.

BoT said in its report that a total of 67.84bn/- was sold to the market, while the government had planned to raise 45bn/-. But only 43 bids emerged successful out of 72 received, a clear indication that some investors bidding price was high for the government to pay at maturities.

The highest bid offered at the auction was 77/57-, the minimum bid/100 was 63.56 while the minimum successful price/100 was 72.20. But the weighted average price for successful bids was 74.86.

Also, the weighted average yield to maturity was 16.69 per cent slightly higher than 16.50 per cent of the previous sale of 10 years long term government note in February this year.

As prices fall, yield rates head north. On the other hand, the weighted average coupon yield rate 15.27 per cent up from 15.12 per cent of the preceding sale of the 10 years bond.

The 10-year Treasury bond auction did not obtain a good response from investors, signalling a possible high level of liquidity in the circulation. Proceeds from the bond, would be used to finance infrastructure projects and settle some maturing debts.

Participation of both local and foreign investors after the current account liberalisation has given new impetus in the sale of the debt instruments.

Some of the key local investors in the long term government paper are commercial banks, insurance companies, pension funds and some microfinance institutions.
Source: Daily News, reported from Dar es Salaam, Tanzania
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