Long term government debt instruments record low-investor returns

Dar es Salaam. Investor’s appetite on long term government debt instruments were low last month and earlier this month, after both 10 and 15 years Treasury bonds floated during the period ended up being undersubscribed.

The auction results summary published by Bank of Tanzania (BoT) has shown that during the Wednesday July 03, 2019 float, a total of Sh65.6 billion were tendered against offered Sh122 billion.

Yields to maturity was lowered down to 15.1 per cent lower that 15.6 per cent recorded during similar bond floated on June 3 this year while coupon yield lowered to 14 per cent from 14.5 per cent respectively.

At the end of auction, the central bank accepted 15 out of 37 bids valued Sh23.8 billion.

The BoT reports have shown that the two long term debt instruments floated last week were all undersubscribed.

According to the auction results, the 15-year treasury bonds floated on June 19 this year, seeking to raise Sh91 billion, succeeded to raise Sh63 billion.

The other bond was 10-year which was floated on June 3 this year was also undersubscribed as Sh15 billion were tendered against offered Sh87.2 billion.

Analysts say the slow response of investors during last month and Wednesday’s floats were due to absence of commercial banks, as they are just preparing the financial accounts for the second quarter ending June.