Tanzania: Investors rush for govt 7-year bond

Excess liquidity that continued to be felt in the local market made the seven years bond auctioned by the Bank of Tanzania (BoT) to register oversubscription.

The NMB e-market report said the local market is characterised with the stable short term interest rates with excess liquidity continuing to be felt by most market participants.

Short term interest rates traded at about 10 per cent.

Commercial banks are the leading investors in the short term government paper.

Others are pension funds, insurance firms and few microfinance institutions.

Proceeds from the bond, would be used to finance long term infrastructure projects as well as settle some maturing debts.

According to the auction summary, the long term fixed instrument fetched 93.64bn/- compared to 50bn/- offered to the market for tendering.

At the end a total of 73.66bn/- was retained as successful amount.

Also the oversubscription of the long term debt security is explained by the hiked weighted average yield to maturity that jumped to 17.57 per cent compared to 16.91 per cent of the seven years bond issued early September this year.

Similarly, investors in the seven years debt instrument will enjoy the increased weighted average coupon yield of 14.30 per cent compared to 13.88 per cent of the preceding session.

The minimum successful price/100 was 69.47 slightly low compared to 71.00 of the preceding seven years debt instrument.

Similarly, the weighted average price for successful bids was 70.45 compared to 72.57 of the previous session.

Also the highest bid/100 for the long term government paper was 76.50 compared to 77.00 of the session that expired in September this year. A total of 61 bids were received and 25 emerge successful.
Source: Daily News, reported from Dar es Salaam, Tanzania
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