THE 25 years Treasury bond oversubscription and yields rose as predicted by debt analysts when longer tenure instrument went under the hammer for the first time last Wednesday.
The analysts projected that the bond would receive a warm welcome to see yield to maturity rose to around 16.00 per cent and oversubscribed handsomely.
Thus market welcomed the first 25 years government bond as per debt analysts with an almost four time oversubscription while yield to maturity shot to 16.34 per cent well above 15.95 per cent.
Vertex International Securities, Advisory and Capital Markets Manager, Ahmed Nganya, predicted last week would rise by 0.5 percentage point to 16.00 per cent if auctioned at discount price.
“Auction results for the 25 – year [Treasury] bond echoed our last week sentiment where expected the yield to maturity to be around 16 per cent,” Mr Nganya said. Also, the bond was sold at discount at an average price of Tsh 97.6296.
The minimum price was Tsh 95.00. Since January the Treasury bonds were sold at par value of at premium prices.
Tanzania Securities also projected the bond oversubscription last week based on attractive yield which poised to entice the investor’s appetite at a fixed return of 15.95 per cent.
“The bond attracted 842 bids worth 325.66bn/-. The auction was oversubscribed by 279 per cent,” Tanzania Securities said in its Weekly Market Blast yesterday.
However, the central bank pocketed only 132.62bn/- and leaves the rest on the table. Zan Securities Chief Executive Officer Mr Raphael Masumbuko said in the firm’s Weekly Market Wrap-Ups that the bond was highly anticipated to be oversubscribed.
“This is a strong indication that there is a very [high] demand for government securities and we expect this trend to continue for the upcoming Treasury bill auction this week,” Mr Masumbuko said.
Nevertheless, the 25 years bond implied the longevity of government liability with aim to raise long term funds to help push to completion long term projects which at the end would have huge developmental impact.