Tanzania: Bonds undersubscribed as money supply tightens

A ten-year Treasury bond was under subscribed to cap weak performance of government securities in the market for the month as investors are deterred by squeezing liquidity.

From the Bank of Tanzania (BoT) auction summary, a total of 18.87bn/- was sold to the market out of 45bn/-, and the government retained it as successful amount. 

All the 20 bids that were offered at the auction for application emerged successful.

The highest bid offered at the auction was 77.61, the minimum bid/100 was 65.05 while the minimum successful price/100 was 65.05. But the weighted average price for successful bids was 73.63.

Also, the weighted average yield to maturity was 17.01 per cent slightly higher than 16.69 per cent of the previous sale of 10 years long term government note.

On the other hand, the weighted average coupon yielded 15.53 per cent up from 15.27 per cent of the preceding sale auctioned in April this year.

As prices fall, yield rates head north. Funds raised from the sale of the government notes are targeted to finance development projects like road and railway infrastructures that are necessary cutting down cost of transport.

Financial analysts attribute weak performance of almost all the government securities auctioned in June this year to a tightening liquidity.

Some of the key investors in government securities include pension funds, insurance firms, some microfinance companies and few commercial banks.
Source: Daily News, reported from Dar es Salaam, Tanzania

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