DEBT analysts have predicted a slight increase in yields for the 15-year Treasury bond due to a low liquidity level in January.
They said the low money in circulation in this month would lead to a price drop of government long -term securities, which in turn would push yields up.
The government today wants to borrow from the public 122bn/- in 15 years at a coupon rate of 13.5 per cent yearly.
Zan Securities Chief Executive Officer Raphael Masumbuko projected a yield increase based on last week Treasury bill results after its prices dropped.
“We forecast an increase in yield in the next week’s auction for 15-year Treasury bond due to this week Treasury bill results, where prices for bill decrease. “We think liquidity is somehow low this month,” Mr Masumbuko noted.
Mid-last week, the Bank of Tanzania (BoT) sought to raise 90.23bn/- through a Treasury bill, instead was undersubscribed by 60.93bn/-.
The central bank pocketed 25.10bn/- for 35 days and 91 days which were unsuccessful, while the 182-day successful amount was 3.0bn/- and 364 days attracted 22.1bn/-.
The bills weighted average yields (WAY) for 182 days and 364 days 2.56 per cent and 5.22 per cent respectively.
The weighted average price for 182 days and 364 days was 98/74 and 95/05 respectively. Tanzania Securities also said in its Weekly Market Blast that there could be a slight increase in the WAY for long-term instruments.
“…But with a likelihood of oversubscription since investors are looking for the higher return with the modest risk, which bring demand for treasuries higher,” Tanzania Securities said.
Orbit Securities, a leading stock brokerage firm, said the first auction in this year for a two-year government bond was massively undersubscribed and pushed up yields.
The two-year instrument was undersubscribed by 71.7per cent compared to the one held in last August which was oversubscribed by 3.5 times the offer amount.
During auction, BoT offered 122.5bn/-, while the public tendered 34.63bn/-.
“Despite a rise in the lowest bid price, the weighted average successful price lost 76bps (basis points) to 100/6872,” Orbit said in its Weekly Market Synopsis.
As a result, the weighted average yield to maturity gained 41.69bps to 7.5103 per cent while the weighted average coupon yield gained a slight 5.83bps to 7.7666 per cent.