The 2-year Treasury bond expected to be auctioned tomorrow is projected to slightly increase in yields due to low appetite.
However, debt analysts said the medium-term government instrument stood an oversubscription chance, albeit at a low amount.
Tanzania Securities predicted in its Weekly Market Blast report on Monday the first bond to be auctioned this year with a coupon rate of 7.82 per cent would be welcomed with a slight increase in the weighted average yield (Way) with low volatility.
“There could be a slight increase in the Way with low volatility towards a decline in yields for medium-term instruments due to low appetite for these medium-term instruments,” Tanzania Securities said.
However, the report further predicted the likelihood of oversubscription, but at a minimal amount compared to previous auctions.
“Hence, the increase in yields out-weights the decline in the coming auction,” Tanzania Securities’ report showed.
On the other hand, Zan Securities pegged the 2-year bond oversubscription to investors’ high appetite in short term securities.
“We expect the auction for the 2 – year Treasury bond to oversubscribe owing to investors’ appetite in short term Treasury securities,” Zan said in its Weekly Market Wrap-up at the weekend.
Though appetite for bonds and bills are hard to compare, the first Treasury bill auctioned last week was undersubscribed, signifying low investors’ appetite for a short-term instrument.
According to the auction’s last week summary report, the government wanted to raise 90.23bn/- from the public through the bill.
However, the instrument was undersubscribed by 21.70bn/- with the government pocketing 50.53bn/-.
During the auction, there was a 35-day successful amount worth 1bn/-, a 91-day successful amount worth 1.5bn/-, a 182-day successful amount worth 873.68m/- and a 364-day successful amount worth 47.15bn/-.
The weighted average yield for 35 days, 91 days, 182 days and 364 days was 1.99 per cent, 2.50 per cent, 2.60 per cent and 4.63 per cent, respectively.
The weighted average price for 35 days, 91 days, 182 days and 364 days was 99.81, 99.38, 98.72 and 95.59 cents, respectively.