Tanzania: Investors appetite for govt bills falls

Performance of the short term government paper has been below expectations in the previous four auctions ending up registering undersubscriptions.

The Bank of Tanzania (BoT) auction conducted recently shows that investors’ appetite for the paper has remained low due to tight liquidity in the circulation. 

According to the auction summary, the successful bids worth 6.56bn/- out of 8.57bn/- tendered, far below 135bn/- sought to be raised.

Commercial banks are the leading investors in the short term government paper. Others are pension funds, insurance firms and few microfinance institutions.

Explanation from analysts show that most investors including commercial banks and corporate clients are fulfilling annual tax obligations for the financial year 2014/15 thus slashing the amount that was destined for investments in the government securities.

The weighted average yield to maturity across all tenures increased significantly compared to the previous three treasury bills auction.

The weighted average interest rates on the 364 days increased to 13.61 per cent compared to 13.41 per cent of the preceding session.

On 182 days, interest rate rose to 12.69 per cent from 12.03 per cent while the 91 days offer, it changed slightly to 7.82 per cent from 7.86 per cent and for 35 days tenor, yield rate rose to 6.30 per cent from 5.77 per cent.

The BoT summary shows further that a total of 65bn/- was sold in 364 days period, 52bn/- for 182 days, 15bn/- for 91 days tenure and 3bn/- for 35 days offer.

All the offers were undersubscribed, the weak performance recorded as it was in the previous session.

The 364-day attracted bids worth 3.92bn/- but at the end only 2.06bn/- emerged as successful amount; for the 182-tenor, a total of 773.7m/- was total amount tendered and 662.4m/- was retained as successful bids.

For the 91-day, the government accepted 2.36bn/- as successful bids the same amount tendered while for the 35 days offer 1.50bn/- was tendered and retained as successful amount.
Source: Daily News, reported by Sebastian Mrindoko, from Dar es Salaam, Tanzania
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