STRONG demand greeted the treasury bills auction sending the note to over subscription despite the fall of yield rates across all tenures. Bids worth 255.98bn/- were collected on the auction of the short-term maturities held at the Bank of Tanzania (BoT) on Wednesday, indicating high market liquidity among investors.
Investors in the government securities
particularly commercial banks dominated the show of the treasury bills
auction, the situation that may have impacted on the credit extended to
the private sector.
According to the Bank of Tanzania (BoT)
Economic bulletin for the quarter ending June, the total domestic credit
by the banking system declined by 4.1 per cent year on-year in June
2017 compared with an increase of 23.7 per cent in June 2016.
Other investors in the treasury bills
auction are pension funds and some microfinance institutions. However,
apart from oversubscriptions, the government retained 141.5bn/- as
successful amount which is slightly below 169bn/-, the amount offered to
the market for bidding.
Central Bank uses the short-term
government note to mop excess liquidity in the circulation. Interest
rates on the 364 tenure declined to 10.24 per cent from 10.76 per cent
and 11.21 per cent of the two previous sessions. Yield rate on 182 days
tenure declined to 7.35 per cent from 7.68 per cent and 8.66 per cent of
the preceding sessions.
Weighted average price for successful
bid decreased to 9.37 per cent from 9.45 per cent and 10.30 per cent of
the last sessions. The 364 days tenure attracted bids worth 209.4bn/-
compared to 100bn/- offered to the market and at the end 100bn/- was
retained as successful amount.
The 182 days offer attracted bids worth
40.4bn/- compared to 65bn/- offered to the market for bidding and
40.4bn/- was kept as successful amount. The two tenures, 364 and 182
days offer commanded 98 per cent to the total bid tendered to the market
in the Wednesday auction.
The number of successful bids was 164
out of 238 that participated in the one year treasury bills auction. The
highest bid/100 and lowest bid/100 was 91.01 and 87.00 respectively
while minimum successful price/100 was 90.52 and with weighted average
price for successful bid was 90.73.
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