T-bonds undersubscribed
The Twin Towers, Bank of Tanzania’s headquarters. PHOTO|FILE
What you need to know:
- The auction results show that 40 bids valued at Sh49.3 billion were received against an offer of Sh124.5 billion. At the end of the auction, BoT accepted 36 bids valued at Sh49.2 billion.
Dar es Salaam. Investors’ appetite for ten-year Treasury bonds has waned. The Bank of Tanzania (BoT) floated the bonds, but yesterday they ended up being undersubscribed.
The auction results show that 40 bids valued at Sh49.3 billion were received against an offer of Sh124.5 billion. At the end of the auction, BoT accepted 36 bids valued at Sh49.2 billion. There was a slight increase in the yields yesterday compare with that on May 23.
Yields upon maturity increased to 14.41 per cent from 13.94 per cent while coupon yield rose to 13.54 per cent from 13.19 per cent.
The highest bid was 89.0000/100 while the lowest was 73.9800/100, but the weighted average price for successful bids was 81.5023/100.
In the previous similar bond floated on May 23, Sh86.87 billion was tendered against Sh111.4 billion offered and BoT accepted Sh58.16 billion only.
Stakeholders say investors shun government securities due to low yields. Orbit Securities Limited chief executive officer Juventus Simon said despite the improvement in yields it would take some time for investors to shift back to government securities.
A T-bond is a marketable, fixed-interest government debt security with a maturity of more than 10 years. Treasury bonds make interest payments semi-annually, and the income received is only taxed at the federal level. Treasury bonds are known in the market as primarily risk-free.
