Tight liquidity hurts demand for short-term bills

The easing tight liquidity stance in the circulation has seen the 12 months treasury bills auctioned by the Bank of Tanzania (BoT) on Wednesday registering an overly subscriptions, but there was little appetite for short term papers.

The BoT auction summary shows that the total amount tendered jumped to 190.48bn/- compared to 120.49bn/- of the previous session held two weeks ago.

With the exception of 364 days offer that recorded over two times over subscriptions, the remaining, 182, 91 and 35 days received little subscriptions.

Some of the key investors in the treasury bills are commercial banks, pension funds, insurance firms and few microfinance institutions.

In the 364 days tenure fetched a total of 137.97bn/- up from only 65bn/- offered for tendering. The 182 days offer attracted bids worth 45.93bn/- compared to 52bn/- offered for tendering.

For the 91 days offer, 15bn/- was offered and fetched 6.57bn/- while the 35 days a total of 3bn/- was offered to the market but failed to fetch bids.

Despite the undersubscription of the one year Treasury bill instrument, the government at the end retained 182.44bn/- as successful amount.

The highest and lowest bid/100 for the 364 and 182 days offers were 86.99/83.37 and 93.48/91.97 respectively while for the 91 and 35 days tenor had 97.70 / 97.10 and 00/00 respectively.

The weighted average interest rate on the 364 days increased to 17.70 per cent compared to 15.98 per cent of the previous session held two weeks ago.

On 182 days, interest rate rose slightly to 16.09 per cent compared to 15.13 per cent while the 91 days offer declined slightly to 10.02 per cent compared to 10.03 per cent.
Source: Daily News, reported from Dar es Salaam, Tanzania
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