Tanzania: Two-year treasury bills seen weak, undersubscribed

Two-year Treasury bonds traded last week by the Bank of Tanzania (BoT) was characterised by weak performance despite hiking yield rates ending up undersubscribed.

According to analyst, the uncertainty was due to the value of the shilling against the US dollar which could be among the reasons for underperformance of the government security.

“The current situation of the shilling favours foreign investors in trading on debt instruments but future uncertainties of the local currency is holding back investors decision to go for the opportunities,” said Mr Raphael Masumbuko, Zan Securities Chief Executive Officer.

After partial liberalisation of the capital account, the country’s capital and security markets has seen increased flow of investments particularly from the East African Region.

The BoT auction summary shows that a total of 55bn/- was offered to the market for bidding but it ultimately fetched 50.84bn/- as total amount tendered.

Similarly, the Weighted Average Yield to Maturity increased to 14.01 per cent compared to 12.29 per cent of the 2-year treasury bonds auctioned on March this year.

The Weighted Average Coupon Yield also increased to 8.7 per cent compared to 8.4 per cent of the previous 24 months treasury bonds. The highest and lowest bids per 100 were 92.86 and 86.45 respectively.

The minimum successful price per 100 was 86.45 while the Weighted Average Price for Successful Bids was 89.48.

Some of the key players in the debt security instrument are commercial banks, pension funds, insurance firms and some microfinance institutions.
Source: Daily News, reported from Dar es Salaam, Tanzania
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