Saturday, January 2, 2016

Investor’s year end obligations affect T-bills performance


 
YEAR-END taxes and other shilling obligations impacted on the treasury bills auction on Wednesday that ended undersubscribed by 35bn/-.
The Bank of Tanzania (BoT) auction summary shows that a total of 98bn/- but ended up collecting 62.90bn/- as total amount tendered.

Key bidders in the one year treasury bills, which is the last short term instrument to be auctioned in the year 2015, are namely commercial banks, pension funds, insurance companies and some microfinance institutions.
NMB e-markets report shows that the treasury bills auction was undersubscribed by 35bn/- as year-end taxes and other shilling obligations are due.
However the yields were fairly flat across all tenures.
According to analysts, the lower T-bill interest rates and yields drop, the more investors are encouraged to look for riskier returns elsewhere in the market.
But this is particularly true during times when inflation rates are higher than the returns on T-bills, essentially making the real rate of return on T-bills negative.
With exception of the 91 days offer that saw its yield rates slightly declining the remaining tenures made slight increase.
Interest rates for the 364 days offer increased to 18.66 per cent compared to 18.65 per cent in the previous session.
The 182 days offer has its yield rates jumped slightly to 17.38 per cent compared to 17.10 per cent of the one year treasury bills held two weeks ago.
The 91 days tenure experienced a slight decline to 9.20 per cent compared to 9.29 per cent of the other session. The 364 days tenure fetched a total of 37.01/-bids against 55bn/- offered for tendering.
The 182 days offer attracted bids worth 25.84bn/- compared 35bn/- sought to be mobilised. For the 91-day offer, 51.15m/- was tendered from 7bn/- put to the market for tendering.
Despite the over subscription of the one year Treasury bill instrument, the government at the end retained 27.47/- as successful amount.
The highest and lowest bid/100 for the 364 and 182 days offers were 85.72/ 80.50 and 92.20/ 91.50 respectively while for the 91 and 35 days tenor had 97.76/ 97.76.

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