By Abduel Elinaza
The ten-year
Treasury bond minimum successful price moved up by 126 basis points
indicating the central bank leaves a room for rate increase this year.
The minimum price
increase of 1.54 per cent at the auction yesterday was also described as
the
central bank maintains bond investors as the country heads to
General Election later this year.
Zan Securities said
in Treasury Bond Rates in 2019 and Outlook for 2020 report that in
retrospect, all factors were aligned with their last week sentiment as
the subscription level was low at 33 per cent.
"We believe the BoT
is leaving a room for rates increase in the next year and beyond to
maintain investors as the country prepares for the next year's general
elections," Zan said in the report yesterday.
Zan, one of the
leading brokerage firms, projected that the yesterday 10 -year bond
auction might offer a relief to investors following almost a yearlong
decline in rates.
However, Zan said
"today's (yesterday) results came as a surprise to us as the minimum
successful price moved up by 126 basis points or 1.54 per cent.
"Surprisingly, the Bank of Tanzania opted for a highway leaving 31bn/- on the table".
The 2020 outlook
report further said the yester-auction draw some positives from the
current trend namely BoT leaving a room for rates increase in the next
year and beyond as the country is preparing for 2020 General Elections.
During the auction
the government wanted to borrow 122bn/- but the public tendered
81.247bn/- for the 10-year Treasury bond. The successful amount was
55.87bn/-.
The bond weighted
average coupon yield is 13.634 per cent, BoT pegged at 11.44 per cent
before the auction, while yield to maturity 14.52 per cent.
Orbit Securities
said the Treasury bills auction before Christmas was the second
consecutive T-bill auction to get undersubscribed since the beginning of
the financial year 2019/20.
"Investors are out on holidays and funds directed at festive expenses," Orbit said in Weekly Financial Market Synopsis.
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