Tanzania: High Investors' Appetite Lowers Debt Yields

HIGH investors' appetite on government securities has continued to drive down yield rates and the same is expected next year.

This time around, the rate for 20 years government bond weighted average yield to maturity gave up

33bps during the auction last Wednesday.

The yield to maturity has debt market analysts predicted dropped to 16.76 per cent from 17.08 per cent realized during the previous auction.

Orbit Securities' Weekly Market Synopsis said yields for the 20 years bond was on a constant decline since it was first launched in September last year.

"Notwithstanding, the public's interest on the bond has been mounting," Orbit report showed.

Orbit, the leading stock brokerage firm, earlier reported during the last two undersubscribed Treasury auctions because investors other obligations namely paying corporate taxes, expenditure on festive season as well as saving for the next 20 years bond.

The two treasury securities that ended the trading session undersubscribed were the 15 years bond and the treasury bills.

The Bank of Tanzania (BoT) offered the usual 117bn/-for the 20 years Treasury bond and the public tendered 286.68bn/-in 443 bids.

"Although the subscription rate was lower compared to the previous similar auction, the bond was substantially oversubscribed by 145per cent, lower than 163per cent attained during the previous similar auction," the report showed.

Zan Securities' Weekly Market Wrap-Ups said high appetite drove down yield rates as the central bank has a room to maneuver.

"We do not expect any deviation from this trend in the next Treasury bill auction," Zan said in the report.

The number of bids was rather high during the auction under review. The previous 20 years bond auction received 409 bids.

At the end, the Bank of Tanzania (BoT) accepted 100 bids compared to 259 accepted during the previous auction.

The total accepted value was 124bn/-, down from 168.29bn/-accepted during the previous similar auction.