Tanzania: Govt Bonds Appetite Seems to Fade Off

 By Abduel Elinaza

The debt investors' appetite for government securities seems to waning off after the ten-year bond was undersubscribed by 43.25 per cent during last week auction.

The last week under subscription was a change of scenery after years of raising significant appetite of government securities which was pushed by yields and prices.

The results, also, was against debt market analysts who projected that the instrument to continue being oversubscribed based on increase appetite and yields.

The Bank of Tanzania (BoT) wanted to raise 110.03bn/- from 10 years bond while the public's tender 62.44bn/- equals an under subscription rate of 43.25 per cent.

Orbit Securities on its Weekly Market Synopsis said the weighted average price for successful bids went up by 31.77 basis points (bps) to Tsh 100.0158, slightly over premium.

"In a change of scenery," Orbit said, "the Treasury bond ... was undersubscribed, different from recent occurrences of significant appetite of Treasury bonds by the public".

As a result, the weighted average yield to maturity went down by 2.3bps to 11.4686 per cent.

At the end of the day, BoT accepted a total of 20 bids worth 62.42bn/-, leaving 12m/- on the table.

Zan Securities said in its Weekly Market Wrap-up said the results of last week auction for 10-year Treasury bond signal "a change in investors' appetite".

"We expect the trend to continue [this] week," Zan said.

Tanzania Securities said in its Weekly Market Blast that the bond with a coupon rate of 11.44 per cent.

The way average yield declined to 11.46 per cent from 11.49 per cent in the last auction held in August this year.

However, the debt analysts predicted write that the yields will fall due to increase appetite that pushed up price.

The analysts paged their projection on the fact that banks need the instrument for liquidity purposes.

Last week before the auction Zan said: "We expect the 10 - Year Treasury Bond to post a positive performance contrary to what we saw during this week's Treasury bill auction as institutional investors especially commercial banks need this bond for liquidity purposes."