Demand for 5-year debt instrument high
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THE appetite for the five-year treasury bonds remained high in an auction held last week attracting bids worth 233.94/-, which is two times the amount sought to be raised indicating improved liquidity among the investors.

The auction results by the Bank of Tanzania (BoT) show only 22 out of 127 total number of bids received emerged successful. At the end, the government took 90bn/- as successful amount which is the same offered to the market for auction.

The weighted average yield to maturity increased to 13.64 per cent from 13.06 per cent and 17.92 per cent of the previous two sessions held in June and April, this year.

The weighted average coupon yield was 10.90 per cent compared to 10.67 per cent and 12.77 per cent of the preceding auctions. Weighted average price for successful bids was 84.16 compared to 86.02 and 71.86 of the preceding sessions.

Minimum successful price /100 was 83.92 compared to 83.85 and 70.67 held in the sessions before.

The highest and lowest bids /100 were 88.12 and 69.11 respectively. Yields may stabilise as more funds are chasing government papers as well as continued decline in inflation.

Treasury bonds are among the instrument used by the government to borrow from the public for various development projects.

Some 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 microfinance institutions.

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