The seven-year Treasury bond auctioned last week was oversubscribed
by 40 per cent, a situation which indicates continued increase in
liquidity in the economy and the banking sector in particular.
The auction results posted by the Bank of Tanzania (BoT) for the
10.08 per cent Treasury Bond indicates that bidding for the instrument
was 76.9bn/-, against offer totalling 55bn/-.
The weighted average yield to maturity was 15.25 per cent, slightly
higher than the last Seven-Year Treasury bond’s auction which was at
15.06 per cent.
Likewise, an overly subscription situation is a clear
indication that investors were awash with cash disproportionate with the
investment opportunities.
Hiked interest rates to 15.16 per cent could be one of the reasons
that hooked massive investments.
The secondary market witnessed bonds
worth 17.9bn/- being transacted during the week for the five, seven and
10 year maturities higher than previous week’s bonds transactions worth
8bn/-.
Over 60 per cent 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 micro-finance
institutions.
Tight liquidity is one of the BoT monetary policy
instruments used to tame inflation.
The government said during the 2012/13 budget estimates that it will
continue with its arrangement to borrow from domestic market for
financing development projects and paying for rollover of maturing
Treasury Bills and Bonds.
Source: The Daily News,http://www.dailynews.co.tz , reported by Sebastian Mrindoko in Dar es Salaam
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