News Column

One-Year Treasury Bills Demand Seen Declining

June 23, 2014



LIQUIDITY tightness coupled with forthcoming quarterly settlements have been attributed to low performance of the 12-month treasury bills. According to NMB e-markets report, tightness in the local money markets was felt as large market players showed strong demand for near - to medium - term funds.

The market on Wednesday traded at an average of 13 per cent and may trade higher as large quarter-end payments get settled.

The Bank of Tanzania (BoT) auction summary shows that the government sought to raise 135bn/- from the public but ended up with 114.17bn/-, signifying undersubscription although the total number of bids received and those successful remained 135. It is the second time since January, this year for the one year treasury bills maturities to be less attractive to investors.

Yield rate did not change much when compared to the previous session's 12 months note auctioned two weeks ago. The total amount tendered for the 364-day offer was 52.57bn/-, the undersubscription against the 55bn/- initially sought at interest rates of 13.2 per cent, up from 12.9 per cent of the previous session.

The 182-day offer was subscribed to 47.07bn/- against the 45bn/- offered for tendering at a rate of return of 12.7 slightly down from 12.8 per cent of the previous market.

For the 91-day, a total of 11.52bn/- was tendered out of 32bn/- offered to the market at the rate of 10.56 per cent compared to 10.67 per cent of the last session. In this note, investors were attracted to the 35-day offer, for which the bank put forward 3bn/- for tendering and was all grabbed.

Treasury bills and bonds are among the instruments that the government uses to borrow money from the public. Over 60 per cent of the key players of long term maturities are commercial banks, with retail investors sharing only five per cent of the business. Other investors are pension funds, insurance companies and few micro-finance institutions.


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Source: AllAfrica


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