T-bills draw strong demand despite declines

TANZANIA: TREASURY bill market recorded strong investor demand in the latest auction despite a general decline in yields across most maturities, signalling continued liquidity in the banking system and sustained appetite for government paper.

Zan Securities Advisory and Research Manager Isaac Lubeja, said yesterday that the latest Treasury bill auction demonstrated robust investor appetite for government securities, with most tenors recording substantial oversubscriptions.

“The strong subscription rates and declining yields across the 35-day, 91-day and 182-day maturities indicate that liquidity remains abundant within the market,” he said.

The Bank of Tanzania (BoT) auction held last Wednesday offered 35-day, 91-day, 182-day and 364-day Treasury bills worth a combined 288.7bn/-.

“Looking ahead”, Mr Lubeja said, “institutional investors are expected to remain active in government securities as they seek to deploy excess liquidity.

“Demand is likely to remain strongest in short- to medium-term instruments where yields remain attractive relative to prevailing inflation of 4.2 per cent.”

Secondary bond market activity is also expected to remain healthy, particularly in longer-dated government bonds. Recent trading patterns indicate sustained institutional demand for the 20-year and 25-year treasury bonds as investors continue positioning for long-term income opportunities.

The 364-day Treasury bill attracted the highest demand with a subscription rate of 363.67 per cent, followed by the 35-day bill at 274.55 per cent and the 91-day bill at 170.2 per cent.

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Zan Securities noted that the BoT allotted the amounts initially offered for most maturities, while accommodating higher demand in the one-year paper.

Market data showed that yields declined across the 35- day, 91-day and 182-day maturities, reflecting sustained demand and ample liquidity in the financial system. However, the 364-day yield moved higher to 7.1175 per cent from 6.9219 per cent in the previous auction.

Lubeja said demand is expected to remain firm as institutional investors continue to deploy excess liquidity into government securities, particularly in short- to medium-term maturities where returns remain relatively attractive compared with inflation.

He added that secondary market activity is likely to remain supported, especially in longer-dated government bonds, as investors position for stable income streams.