nngu007
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- Aug 2, 2010
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DEMAND for Treasury Bills has continued to build up despite a further recession of the average yield rate, the Bank of Tanzania (BoT) auction summary has stated.
"There are limited market products to absorb the relatively significant amount of liquidity possessed by investors that has continued to lead to oversubscription," said Moremi Marwa, the Tanzania Securities Limited (TSL) Chief Executive Officer told the 'Daily News' in an interview in Dar es Salaam on Wednesday.
He said the trend of oversubscription would persist as long as trading opportunities are not diversified for investors to pump in the amount possessed.
"With limited investment opportunities, investors have no option despite decline of the yield rate," he added. The investors' appetite for T-bills has remained high despite a continual drop of the average yield rate from 5.7 in last week's auction to 5.3 per cent.
Also demand for bonds has also gone up due to absence of alternative investment opportunities. The Treasury Bills auction summary conducted by the central bank on Wednesday shows that there was 104bn/- oversubscribed against the government offer of 100bn/-.
The government offered 7bn/- for 35 days but was overly subscribed by 4.7bn/-, for 91 days 27.8bn/- oversubscription against 25bn/- offered, for 182 days 26bn/- oversubscription against 35bn/- and 35,1bn/- oversubscription against 33bn/- offered.
However, there is generally decline of the amount subscribed compared to the last auction conducted a few weeks ago. Wednesday's T-bills auction summary indicates that both short term and long term maturities were attractive compared to last week's auction where only long term maturities attracted more investors.
Also the government appetite to borrow to cover for deficiency in the recurrent and development budget is mentioned as one of the factors attracting investors to rush for annual treasury bills.
Over 60 per cent of the investors are commercial banks. Others are pension funds, insurance funds and a few micro finance institutions. The number of retail investors in T-bills is below 5 per cent. There are at least seven corporate bonds which is smaller compared to Kenya which has more than 30 corporate companies issuing bonds
