Debt investors have pulled back on the 35 day, 91 day and 182 day tenors’ Treasury bills as yields are below inflation level.
Thus, the central bank, mid-last week, decided to cancel the auction for the three bills and remained with 364 days which was oversubscribed by 94 per cent.
Orbit Securities Head of Research and Analytics, Imani Muhingo, said the auction results, telling that investors shunned the low day bills due to low return below inflation level which last December stood at 3.2 per cent.
“Investors are pushing back against lower yields,” Mr Muhingo told ‘Daily News’ yesterday.
He said the main reason was that the annual yields for the 35, 91 and 182 days were all lower than inflation.
“[This] means investors in such securities are destroying value, unless yield returns from such securities is not the only intent for holding,” Mr Muhingo said.
During the auction, Bank of Tanzania (BoT) offered 84.53bn/- while the public tendered 164.2bn/- in 83 bids for 364 days’ bill.
The bank accepted 54 bids worth 119.3bn/- which was 141 per cent of the offer and 73 per cent of the tender size.
The weighted average yield rose by 45 basis points (bps) to 5.67 per cent compared to 5.22 per cent during the previous Treasury bills’ auction.
In the previous auction held in the first week of last month, the subscription of Treasury bills went up to 75.9 per cent compared to 26.12 per cent during the last December previous auction.
BoT had offered the usual amount of 90.23bn/-, while the tender size from the public amounted to 68.53bn/- from 45 bids.
The central bank accepted 37 bids worth 50.53bn/-.
Except for the 364 days which slightly rose, the yield to maturity of all tenors remained similar to the previous auction.
The 35 days, 91 days and 182 days recorded yields of 1.99 per cent, 2.50 per cent and 2.60 per cent while the 364 days gained 6bps to 4.63 per cent.