News Column

Govt Securities Remain Attractive to Investors

February 7, 2014

HIGH liquidity in the circulation has continued to be an incentive to investors in the debt securities leading them to record over-subscriptions.

The number of bids received in the auction conducted by the Bank of Tanzania (BoT) on Wednesday that amounted to 60, gives clear evidence that investors possess resources which do not match the limited investment opportunities in the debt market.

Similarly, the trading session witnessed the weighted average yield to maturity, which could be one of the incentives in hooking massive investments, going down to 14.5 per cent compared to 15.4 per cent offered in the previous auction, but did not discourage investors in scrambling for the debt instrument.

Nonetheless, despite the over subscription as well as the huge number of bids received, only 13 became successful while the government took only 30.9bn/- offered to the market for bidding.

The amount tendered in the 5-year Treasury bond note jumped to 111.05bn/- compared to only 30.9bn/- offered for bidding.

The leading investors in debt instrument like commercial banks, insurance firms and pension schemes find it safe to invest in risk free and highly rewarding government securities than in other economic activities.

Long term debt securities like bonds are among the instrument used by the government to borrow from the public for financing long term projects like infrastructures.

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Source: AllAfrica

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