- Published on Wednesday, 18 July 2012 01:10
- Written by ABDUEL ELINAZA
- Hits: 550
CURRENT interbank liquidity is expected to support participation in this week's treasury bill (TBs) auction despite a further decline in yields rates.
Money market analysts attributed the trend to improved liquidity in circulation and good yields rate from short-term government papers at the moment. The Orbit Securities Head of Operations and Dealings, Mr Juventus Simon, said that the auction anticipated a good reception tomorrow from bidders as bills pay better compared to equities.
"Investors are likely to switch their attention to bills' auction from the bourse (DSE). At the moment there is a huge demand for equities, while the supply is limited," Mr Simon said. He said further that bills were offering good yields in comparison to equities: "demand might lead to bills yield rates to decline."
Standard Chartered Bank said market liquidity has remained well supplied with overnight rates further declining as banks funding demand remains below supply.
"We expect this liquidity to prevail as we move towards end of week," the bank said on daily market update issued yesterday, "the last bills issue saw a decline in rates across buckets with highest decline noted on the one and 12 months buckets."
The Bank of Tanzania is in the market this week and plans to raise 100bn/- through T-bills offer. The amount is split into: 35 Days 5.bn/-, 91 Days 30bn/-, 182days 30bn/- and 364 days 35bn/-. The Zan Securities CEO, Mr Raphael Masumbuko, said the short-term paper is expected to be oversubscribed across all buckets because of late investors' appetite have increased overtime due to good yields.
"The T-bill will be received well. As, on average, it pays relatively more than stocks in real terms," Mr Masumbuko said. He said he last T-bill that was auction at the beginning of this fiscal year was well received as the market has more liquidity compared to early this year.
The first T-bill auction, which sought to raise the same amount, for government's new fiscal year a fortnight ago was oversubscribed by 81 per cent and the central bank accepted 102.75bn/-.
The oversubscription was besides dropping to yield rate especially for 35days which slid down by almost half from 8.09 per cent to 4.50 per cent, but the amount offered was 12bn/- against 5.0bn/- on offer.
On the other hand, the 91-day bill interest rate also slightly increased from 13.31 to 13.38 per cent but the amount tendered was somewhat below that on offer of 30bn/-. It was undersubscribed by 1.38bn/-. BoT accepted only 16bn/-.
The 182 and 364-day bills both saw a slightly decrease in yield rates by 0.4 percentage points to 13.41 per cent and 0.63 percentage points to 14.01 per cent, respectively.