THE 10-year bond by the Bank of Tanzania (BoT) was oversubscribed by 19.49bn/-, an equivalent of 65 per cent.
According to the results of the tender floated last week, despite the oversubscription, the central bank accepted only 30bn/- sought to be mobilised after bidders demanded for high prices.
“The highest and lowest bids were valued at 84.10 and 70.06, respectively while the average price for successful bids was 81.56,” stated the report. The continued oversubscription testifies to stability of the liquidity stance in the market.
The BoT interventions to either ease or tight liquidity stance in the market is done cautiously without disturbing interest rates of the money instruments.
In the 10-year tender, only 24 out of 31 bids received emerged successful, an indication that some investors tendered below the price offered at the market.
In the preceding auction deal, the government accepted more funds and concentrated on bond issuance to finance its development expenditures.
In the meantime, interest rates was 15.06 per cent lower than the rates offered in the previous 10-year deal, it did not prevent investors from injecting massive funds.
Furthermore according to the central bank’s monthly economic review for the year ending June 2012, auctioned Treasury bonds worth 30bn/- and 15bn/- of 2-year and 10-year maturities, respectively.
The auctions were oversubscribed and dominated by commercial banks, pension funds, insurance and few micro-finance institutions firms which are among the key players in the long term fixed instruments.
The BoT accepted bids amounting to 20bn/- and 15bn/ for the 2-year and 10-year Treasury bond, respectively.
The weighted average yields for the treasury bonds increased when compared to the rates recorded in the preceding auctions.