THE first long term debt instrument to be auctioned this year was received on a low note, ending up undersubscribed.
The Bank of Tanzania (BoT) auctioned seven-year treasury bonds with a quest to raise 138.46bn/- but 57.53bn/- mobilised, which is equivalent to 41.54 per cent of the amount sought. At the end, a total of 53.11bn/- was retained as successful amount.
Normally, proceeds from the bonds instrument are used to finance long term infrastructure projects and settle some maturing debts.
The auction results explain the situation that still affect the money and equity markets where most investors reduced their investment to fulfill social and quarterly tax obligations during year end.
Some of the key local investors in the long term government paper are commercial banks, insurance companies, pension funds and some microfinance institutions. Similarly, the fourth and last sevenyear bond to be auctioned held in October last year was greeted by low appetite from investors due to tight liquidity in the market.
Investors are set to enjoy at maturity an interest or weighted average yield to maturity of 18.43 per cent compared to 17.92 per cent offered in the seven years bond auctioned in October last year. Also investors will enjoy the weighted average coupon yield 14.85 per cent compared to 14.53 per cent offered in the preceding 7-year bond auctioned three months ago.
The minimum successful price/100 declined to 66.22 compared to 67.41 of the preceding seven years debt instrument. Similarly, the weighted average price for successful bids increased slightly to 67.86 compared to 69.37 of the other session.
Also the highest bid/100 for the long term government paper jumped to 73.10 compared to 76.45 of the session that expired in October last year. The lowest bid/100 was 62.13 compared to 64.63 of the previous session. A total of 53 bids were received but only 45 emerged successful.