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20 yrs bond yields up, investors’ appetite shifts

THE 20 years Treasury bond yields are expected to rise as investors’ appetite shifts to other assets—equities.

This, according to the debt market analysts, happens when the bond prices dropped and pushed up yields. Zan Securities Chief Executive Officer Raphael Masumbuko said they projected the yields for the bonds to continue rise in today’s auction.

“We expect yields to continue to rise in the next week auction for 20–year bond as investors’ appetite is slowly shifting into other asset classes like equities,” Mr Masumbuko said.

The government wants to raise 136bn/- from the public and offers a coupon rate of 15.49 per cent a year. Fortnight ago, analysts’ prediction on 15-year Treasury bond echoed their projections of under subscription and slight yield growth.

The BoT sought to rise 122bn/- through a 15-year bond, but ended collecting 94.91bn/-, which was 18 per cent below the target.

Thus, the weighted average yields increased to 13.57 per cent from 13.53 per cent in the previous auction while the weighted average price (WAP) for a successful bid was 99/74 and the minimum successful price was 97/52, the highest and lowest bid was 103/00 and 81/28, respectively.

Orbit Securities said in its weekly market synopsis that despite the highest bid price the average yield for the 15 years bond raised merely 4.39 basis points (bps).

“Despite an increase in the highest bid price compared to the previous auction, the weighted average coupon yield just went up by 4.39bps due to a rise in the weighted average successful price,” Orbit said yesterday.

The first auction in this year for the two-year government bond was massively undersubscribed and pushed up yields.

The two-year instrument was undersubscribed by 71.7 per cent compared to the one held last August, which was oversubscribed by 3.5 times the offer amount.

During the auction, BoT offered the usual 122.5bn/- while members of the public tendered 34.63bn/-.

NMB Bank said in its market digest of last year’s quarter four that in total treasury bonds were oversubscribed by 29 per cent but were lower than a 134 per cent oversubscription marked in the previous quarter.

“[This] indicates low local currency liquidity coupled with the end of year festivities by investors,” the Market Digest issued yesterday said.

Also the Digest said rates fell across all auctioned papers except for 10-year and 15-year auctions which saw rates slightly rise Q-o-Q by 7 and 3 basis points respectively.

The 5-year, 7-year and 20-year fell to 9.10 per cent, 10.09 per cent and 15.01 per cent respectively while 10-year and 15-year rose to 11.56 per cent and 13.53 per cent respectively.

Kamal Group, the Dar es Salaam-based steel ...


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