INVESTORS’ appetite for the 10-year Treasury bond auctioned by the Bank of Tanzania (BoT) on Wednesday was high amid declining yield rates.
The Central Bank auction summary shows that the amount tendered jumped to 204.72bn/-against 122bn/-sought to be raised.
The weighted average yield to maturity declined slightly to 12.89 per cent compared to 14.52 per cent of the previous session that took place in December last year.
The 10 year bond auction came on the back of 33.4 per cent under subscription of the debt instrument auctioned last December.
The 12.41 per cent coupon rate was offered to the 10-year instrument held on Wednesday slightly down compared to 13.63 per cent of the session held in December.
The minimum successful price/100 for the 10 year instrument went up to 87.88 compared to 83.11 offered in the session held in December last year.
The weighted average price for successful bids also rose to 92.13 compared 83.90 that was offered in the preceding session.
The total number of bids received in the session was 108 but only 43 became successful.
Tanzania Securities predicted in its weekly blast report that this year treasuries appetite has been higher for both short-term and long-term as have been witnessed in the over-subscriptions.
“Government securities yield curve may continue to remain normal and weighted average yields are expected to decline due to higher appetite of the government treasuries,” the report showed.
The government raises funds through the 10 years Treasury bonds and other debt instrument to finance the long term projects that will start generating income before the instrument matures.
Some of the long term infrastructural projects that benefit from the funds include hydropower, roads, railways, bridges, ports, airports as well as social services like hospitals and schools.
The implementation of the projects would stimulate business growth, contribute to improved living standards and the government collects more revenue.