INVESTOR appetite for medium term government securities continued to remain low, as a 5 -year treasury bond auctioned last Wednesday by the Bank of Tanzania was undersubscribed.
The bonds, the second five-year instrument to be auctioned this year attracted bids worth 55 .14 bn/- compared to the 7 9 .3bn/- target.
4 2bn/- was retained as successful amount. Most of the long term maturities auctioned recently with exception of 20 years treasury bonds met low demand.
The funds sourced through the government securities are spent for financing infrastructure projects development like railway, roads, bridges, airports, schools, ports and hospitals.
Commercial banks, which are key players in the government securities, prefer treasury bills because they are shortterm rather than treasury bonds which are long-term securities maturing over a year.
The other players in the government securities are pension funds, insurance companies, some microfinance institutions and individual investors.
The yield rates increased to 12.9 6 per cent compared to 12.7 0 per cent in the session held in five years instrument auctioned in February this year.
The weighted average coupon rate likewise increased to 10.62 per cent compared to 10.5 2 per cent in the session held in February this year.
The minimum successful price/100 was 85 .4 5 while weighted average price for successful bids was 8 6.36. The number of bids received in the session was 34 and only 28 were successful.