BoT earns Sh70bn from 10-year bond as risk-wary, cash-rich pension funds chase value

 

By Vainess Mollel
The Citizen Reporter

Dar es Salaam. 

The appetite for the Bank of Tanzania’s ten-year Treasury bond last week was high as investors craved for the risk-free debt instruments, according to market data.

The central bank offered the Treasury bond at the total value of Sh55 billion, but the high enthusiasm displayed by investors pushed the bank to increase the value tendered to Sh72 billion.

“High liquidity among investors including pension funds and commercial banks led to an oversubscription,” the Rasilimali Limited general manager, Mr Arphaxad Masambu, told The Citizen in Dar es Salaam.

The BoT summary report for last week’s auction showed that the ten-year bond was oversubscribed by Sh17 billion at the weighted average yield to maturity of 14.2758 per cent.

According to Mr Masambu, the absence of an initial public offering in the market means that every serious investor is eyeing the risk-free securities in which to inject their money – the Treasury bond seems to provide the answer, thus resulting in oversubscription.

He also said there were no corporate bonds on offer yet, whose yields could compete with the one of the government bonds, and because of this fact, there was oversubscription.

Investors were left with only one choice there was of injecting their money.