DEMAND for the five-year treasury bonds was high in an auction held last week attracting bids worth 436.08bn/-, which is four times the amount sought to be raised indicating improved liquidity among the investors.
The auction results by the Bank of Tanzania (BoT) show only 27 out of 221 total number of bids received emerged successful. At the end, the government to 217.06bn/- as successful up from 105.2bn/- offered to the market for auction.
The weighted average yield to maturity declined to 13.06 per cent from 17.92 per cent of the previous session held in April, this year. The weighted average coupon yield was 10.67 per cent from 12.77 per cent of the auction in April.
Weighted average price for successful bids was 86.02 compared to 71.86 of the preceding session. Minimum successful price/100 was 83.85 compared to 70.67 held in the session before.
The highest and lowest bids/100 were 89.62 and 62.00 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.