Over subscription has greeted the two-year government bond auctioned by the Bank of Tanzania (BoT) following improved liquidity in the economy.
The BoT auction summary shows that increased investors appetite for the short and long term government securities has resulted into over subscription.
The two-year bond attracted bids worth 57.65bn/-, up from 40bn/- sought to be mobilised in the tender. But at the end the government retained 40bn/- as successful amount.
The average coupon rate increased to 8.88 per cent in the two years note compared to 8.73 per cent of the previous session held in May this year.
Similarly, the average yield to maturity rose to 14.99 per cent in the bond business conducted yesterday compared to 14.01 per cent of the preceding session.
Read Also:
The highest bid per 100 was 90.32 and lowest bid 72.22 and the minimum successful price pegged at 86.90 while the weighted average price for successful bids was 87.98.
For almost two months, bond market was characterised by weak performance due to tight liquidity in the market that impacted on investors’ capacity to take active role in the business.
Similarly, most of the key participants in the bond businesses particularly banks were fulfilling tax obligation.
Commenting on the bond market performance, the Dar es Salaam Stock Exchange (DSE) Manager; Projects and Business Development said the under-subscription of bonds can be caused by unfavourable bond coupon rates and bond yields or by the various liquidity requirements of the respective bond market participants.
“Currently most of the participants in the bond market are banks that are recently experiencing an increased need for additional liquidity, thereby reducing their participation in the bond market and divesting to other financial instruments,” he said.
