DESPITE a raised weighted average yield to maturity for the 10-year Treasury bonds from the previous auction’s 15.7 to 15.9 per cent, the demand for the long term government papers has remained low.
According to the auction by the Bank of Tanzania (BoT) last Wednesday, the government sought to raise 47.2bn/- from the market but managed to attract only 28bn/- bids, with the government ending up with a mere 2.7bn/- as successful amount.
During the auction, only five out of 22 bids received succeeded, a sign that the subscriptions were below the market price that could be expensive to the government at maturity period.
The market also witnessed the average coupon yield decreasing to 14.5 per cent compared to 14.7 per cent offered in the preceding session of 10-year bond maturities.
The government use debt instruments to mobilize money from the public for both short and long term investment purposes. The instruments particularly treasury bills are used to regulate the amount of liquidity in circulation.
Over 60 per cent of the key players of long term maturities are commercial banks, with only five per cent as retail investors. Others are pension funds, insurance companies and a few micro-finance institutions.
Written by SEBASTIAN MRINDOKO
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