Demand for the five-year treasury bonds was low during Wednesday auction by the Bank of Tanzania (BoT) that recorded a 7.74 per cent, a sign of a moderate appetite on the medium term paper.
The auction results show that a total of 66 out of 90 bids received emerged successful. At the end, the government retained 69.74bn/- as successful amount despite the undersubscription.
The weighted average yield to maturity declined slightly to 17.68 per cent compared to 17.96 per cent of the previous session held in November, last year.
The weighted average coupon yield was 12.66 per cent compared to 12.78 per cent of the auction in November 2016. Weighted average price for successful bids was 72.49 compared to 71.79 of the preceding session.
Minimum successful price/100 was 71.00 the same as in the session held last year. The highest and lowest bids /100 were 73.45 and 67.00 respectively.
Yields may stabilise as more funds are chasing government papers as well as continued decline in inflation.
Treasury bonds are among the instrument used by the government to borrow from the public for various development projects.
Some of the key players of long term maturities are commercial banks, with only five per cent as retail investors. Others are pension funds, insurance companies and a few microfinance institutions.
Source: Daily News, reported from Dar es Salaam, Tanzania