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T-bills yields subscription down spiral continues

THE Treasury bill has been undersubscribed by almost fifty per cent thanks to yields decline that shied out short-term investors.

The under subscription for the mid-week auction for the bills, however, echoed against some debt market analysts who predicted oversubscription.

According to the auction results, only the 364 days was subscribed albeit under. The government wanted to mop out 84.53bn/- instead it got 42.79bn/- from the public which the borrower took all.

On other hand the 35, 90 and 182 days bills attracted no buyers.

Tanzania Securities predicted the yields in short-term government instruments are expected to increase, with under subscriptions expectation “if yields will continue to decline further”.

“We may see under subscription of the Treasury bill, as the yields decline shied out investors who are looking to invest in short-term,” Tanzania Securities said in its Weekly Market Blast on Tuesday.

Furthermore, the stock brokerage firm, said the government securities yield curve will continue to remain normal, with expectations in the yields on treasuries “will improve after reaching a resistance level”.

The 364 bill average weighted price was 96/16 with a yield rate of 4.01 per cent.

“…We still reiterate to foresee that weighted average rate will continue to increase and to be within a range of 3.50 per cent to 4.20 per cent with slight volatility in the high and low rate,” Tanzania Securities said.

Zan Securities, however, predicted on its Weekly Market Wrap-Up that the bills may be oversubscribed, but the results drove the other way.

“We expect Treasury Bills to oversubscribe” at the mid-week this week, Zan Securities said.

Three weeks ago, analysts had it that the T-bills trends portrayed slim chances of near future significant up swing of yields due to the government move to cut cost of borrowing.

The bills yields and subscription levels started going down since January to reach historical low at the end of last month and are keeping dropping.

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Author: DAILY NEWS Reporter

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