- Published on Friday, 17 August 2012 01:37
- Written by SEBASTIAN MRINDOKO
- Hits: 655
FAVOURABLE liquidity situation in the market has continued to attract massive investments in the one-year treasury bills, leading to a 62 per cent oversubscription of the 110bn/- offer.
The Bank of Tanzania’s (BoT) auction conducted this Wednesday saw the offer attracting 184 bids out of which however only 101 became successful as some investors quoted below the price offered.
Despite oversubscription of 68bn/-, the government accepted 105bn/-, which was 5bn/- below the offer, signaling that some investors demanded high returns that could be costly and a burden on maturity period.
“Apart from accepting 105bn/-, the central bank will today return maturities of 56.64bn/-.
This implies that 40.87bn/- outflow from the interbank. It is expected an increase in interbank volumes to cover the liquidity gap,” stated the Standard Chartered Bank in its Daily Commentary.
The acceptance of bids below the amount sought is one of the BoT monetary strategies to regulate the amount of money in circulation. The oversubscription in the one-year TBs is a sign that investors’ resources mismatch investment opportunities.
Similarly, noticeably falling interest rates in almost all bid tenors did not prevent investors from injecting massive funds into the short term government securities.
There was no interest rate in the 35 day offer, which received no bids but notable changes were seen in the 91 day paper with the yield falling from 12.18 per cent down to 11.66 per cent. The other tenors dropped by 39 basis points for 6 months and 15 basis points for the 1 year.
Commercial banks have remained the giant investors in government securities, contributing over 60 per cent of the total market share. Pension Funds, insurance and few micro-finance institutions are among the key investors in the instruments.