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Investors rush for 10-year treasury bonds‏

16 Aug

Daily News

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.

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