Treasury bills market rings in new year on ascendancy

Friday January 11 2019

By Halili Letea @hletea news@tz.nationmedia.co.tz

Dar es Salaam. Investors in the financial market seem to be opting for short term government debt instruments over long term government bonds, after Treasury bills floated by the Bank of Tanzania (BoT) were oversubscribed.

The auction results summary shows that a total of 102 bids valued at Sh171.04 billion were tendered against the offered Sh141 billion, which is an oversubscription of 21.3 per cent. At the end of the auction, the BoT accepted only 48 bids valued Sh138.13 billion.

This happened despite a decision by BoT to slightly cut weighted average yield to 8.38 per cent on Wednesday, compared to 8.47 per cent recorded during the previous auction held on December 24 last year.

Yield for six-month and one-year maturity bills marginally improved to 5.28 per cent and 9.35 per cent respectively from 5.27 per cent and 9.30 per cent during the previous auction respectively.

The 35-day maturity bills fetched no yields this week compared with 3.0 per cent recorded during the previous auction as the three-month bills also continued to fetch no yield.

Many bids (89) were recorded by one-year bills due to high yields, while the remaining maturities received only 13 bids, including 12 bids for the six-month maturity and one bid for 35-days maturity bills.

Analysts say high investors’ appetite on government debt instruments will continue to increase, especially those with short-term maturity falling within one year.

This is unlike the long-term bond market, which attracts low investors, due to low yields paid by the central bank.