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Yields on 7-year govt bond forecast to rise

THE yields on the seven-year government bond are projected to increase, albeit slightly in today’s auction.

The central bank, on behalf of the government, wants to borrow 107bn/- from the public at a price of 10.08 per cent in the next seven years.

Thus, debt analysts project that yields will go up, given the lately huge appetite for medium tenure government securities and now one year bills go under the hammer.

Vertex International Securities attributed their projection to yester-week Treasury bills yields which continue to climb as expected.

“[Hence] we forecast [this] week’s auction results for seven–year bond to follow the [same] trend,” Vertex said in the weekly market report on Monday.

The last October’s auction for the sevenyear bond saw a slight decrease of the yields from 10.08 per cent to 10.067 per cent, but oversubscription amount was almost doubled.

The Bank of Tanzania (BoT) wanted to raise 85bn/- instead, the public tendered 152.105bn/-.

At the end of the auction, BoT took 98.64bn/-. Tanzania Securities said the appetite for medium-term treasuries has been increasing off late and expecting the seven-year bond to follow suit.

“We still expect oversubscription and slight increase in weighted average yield from the previous auction held last October,” Tanzania Securities said in its weekly market blast.

Zan Securities is also predicting the bond oversubscription since there is a strong demand for government securities from the market.

“We anticipate this strong appetite to carry over into this week’s 7-year Treasury bond auction,” Zan Securities said.

Orbit Securities said BoT cancelled the 35- day and 91-day tenors similar to most Treasury bills auctions this year, especially until midMarch. During the auction mid-last week, the central bank offered 76.7bn/- while the total tender size was 133.22bn/-.

The total oversubscription rate was 73.68 per cent. BoT accepted 125.32bn/-.

“Both of the two tenors that were active during the auction saw a 1bps rise in the yield to maturity,” Orbit Securities said. The yield for the 182-day tenor was 3.91 per cent while that of the 364-day was 6.02 per cent.

Zanzibar said on Thursday that more research ...


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