STRONG demand greeted the treasury bills auction sending the note to over subscription despite the fall of yield rates across all tenures. Bids worth 255.98bn/- were collected on the auction of the short-term maturities held at the Bank of Tanzania (BoT) on Wednesday, indicating high market liquidity among investors.
Investors in the government securities particularly commercial banks dominated the show of the treasury bills auction, the situation that may have impacted on the credit extended to the private sector.
According to the Bank of Tanzania (BoT) Economic bulletin for the quarter ending June, the total domestic credit by the banking system declined by 4.1 per cent year on-year in June 2017 compared with an increase of 23.7 per cent in June 2016.
Other investors in the treasury bills auction are pension funds and some microfinance institutions. However, apart from oversubscriptions, the government retained 141.5bn/- as successful amount which is slightly below 169bn/-, the amount offered to the market for bidding.
Central Bank uses the short-term government note to mop excess liquidity in the circulation. Interest rates on the 364 tenure declined to 10.24 per cent from 10.76 per cent and 11.21 per cent of the two previous sessions. Yield rate on 182 days tenure declined to 7.35 per cent from 7.68 per cent and 8.66 per cent of the preceding sessions.
Weighted average price for successful bid decreased to 9.37 per cent from 9.45 per cent and 10.30 per cent of the last sessions. The 364 days tenure attracted bids worth 209.4bn/- compared to 100bn/- offered to the market and at the end 100bn/- was retained as successful amount.
The 182 days offer attracted bids worth 40.4bn/- compared to 65bn/- offered to the market for bidding and 40.4bn/- was kept as successful amount. The two tenures, 364 and 182 days offer commanded 98 per cent to the total bid tendered to the market in the Wednesday auction.
The number of successful bids was 164 out of 238 that participated in the one year treasury bills auction. The highest bid/100 and lowest bid/100 was 91.01 and 87.00 respectively while minimum successful price/100 was 90.52 and with weighted average price for successful bid was 90.73.