Tanzania: Tight liquidity stance hurts bond demand

Tight liquidity stance in the market has continued to affect the bond market and on Wednesday it greeted up the two years bond ending up undersubscribed.

According to NMB e-market report, the liquidity stance is tight evidenced by high interbank overnight borrowing rates of between 14 per cent and 16 per cent. 

The Bank of Tanzania (BoT) auction summary shows that the decreased investors appetite for the short and long term government securities fetching few subscriptions.

The two-year bond attracted bids worth 34.06bn/-, compared to 83.6bn/- sought to be mobilised in the tender. But at the end the government retained 10bn/- as successful amount.

The weighted average coupon rate increased to 9.17 per cent compared to 8.88 per cent in the two years note compared of the previous session held in August this year. 

Similarly, the weighted average yield to maturity rose to 16.75 per cent from 14.99 per cent in the bond business conducted in the preceding session.

The highest bid per 100 was 88.00 and lowest bid 76.00 and the minimum successful price pegged at 84.08 while the weighted average price for successful bids was 85.28.

For almost two months, bond market was characterised by weak performance due to tight liquidity in the market that impacted on investors’ capacity to take active role in the business. 

Similarly, most of the key participants in the bond businesses particularly banks were fulfilling end of month tax obligations.
Source: Daily News, reported from Dar es Salaam, Tanzania
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