Boost for Treasury bills as subscription numbers grow

Dar es Salaam. Investor appetite on government debt instruments, mainly short term, has continued to remain high, after the treasury bills floated by Bank of Tanzania on Wednesday ended up being oversubscribed.

The auction summary published on the BoT website has shown that a total of 98 bids valued at Sh180 billion were tendered against offered Sh141 billion.

At the end of auction, the central bank accepted only 60 bids valued at Sh137.9 billion, which indicated that some bids were rejected due to low prices.

The highest bids for all maturities were ranging from 92.10/100 to 99.71/100 while the lowest bids ranged from 90.80/100 to 99.67/100. At the end of auction, weighted average yield for successful bids were ranging from 91.54/100 to 99.69/100 for all maturities.

This was experienced after the central bank reduced yields to a weighted average rate of 8.25 per cent, compared with 9.21 per cent offered during the previous auction held on February 6, this year.

Many bids were tendered on six months and one year maturities, which led to oversubscription, while 35-day and 91-day maturities were undersubscribed.

The auction result has shown that a total of 81 bids valued at Sh142 billion were tendered on one-year maturity against the Sh104 billion offered.

However, the central bank accepted only Sh104 billion, which was equivalent to the offered amount.

A total of 10 bids valued at Sh36.7 billion were tendered against Sh33 billion offered on six months maturity, but only five bids valued at Sh33 billion were accepted.

The auction results show that yields for 35-day and 91-day maturities were improved from a zero rate during the previous auction on February 6, this year to 3.24 per cent and 3.84 per cent respectively.

During the previous auction a total of Sh169.1 billion were tendered against offered Sh141 billion, but the central bank accepted bids valued at Sh128.6 billion.