15-yr Treasury bond falls short by 52pc even as yields increase

Dar es Salaam. The 15 year Treasury bond floated by the Bank of Tanzania (BoT) this week has fallen short by 52.14 per cent even as yields went up.

The auction results showed that the central bank had sought to collect Sh128.3 billion but investors only bought 74 bids worth Sh61.4 billion.

However, only 43 bids worth Sh46.89 billion were accepted.

There was also a slight increase in the yields for the Wednesday auction compared to the similar bond sold on June 20, 2018.

The Weighted Average Yield to Maturity improved from 14.47 per cent on June 20 to 14.79 per cent on July 18 while the Weighted Average Coupon Yield went up to 14.64 per cent compared to 14.47 per cent previously. Stakeholders say the investors should expect more improvement in yields of the long-term government securities due to uncertainties in the current market.

“There are a lot of uncertainties in the current bond market and yields are going up week after week,” said Zan security chief executive officer Raphael Masumbuko.

He said that investors target to invest when the market prices for long term instruments are down.

On Wednesday, the highest bid was 95.5005 per 100 while the lowest was 70.0000/100. The weighted average price for successful bids was 92.2130/100.

Market trend

Appetite for the government securities is still low, at least for now as the auctions are being undersubscribed. The first bond in the current financial year with 5-year tenure was undersubscribed on July 4 although the yields improved.

The Treasury bills issued auctioned last week was also undersubscribed by 24.7 per cent, even as the total weighted average yields increased comparatively.