DIVERSIFICATION of investors’ portfolio in favour of low risk assets has benefitted government securities to post outstanding performances.
However, investors move to divert their investments to the low risk assets has degraded credit extension to other sectors. For example, the Bank of Tanzania (BoT) monthly economic review for August shows that credit to the private sector slowed by 1.0 per cent to a stock of 16.81tri/-in the year end ing July compared with 15.2 per cent growth in the year ending July 2016.
The treasury bills auctioned on Wednesday attracted bids worth 345.92bn/- which is two times the amount sought to be raised, a sign of 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.
Other investors in the treasury bills auction are pension funds and some microfinance institutions. However, apart from oversubscriptions, the government retained 174bn/- as successful amount 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 9.86 per cent from10.24 per cent and 10.76 per cent of the two previous sessions.
Yield rate on 182 days tenure declined to 7.33 per cent from 7.35 per cent and 7.68 per cent of the preceding sessions. Weighted average yielddeclined to 9.28 per centon the session held on Wednesday compared to 9.37 per cent held two weeks ago.
Weighted average price for successful bid increased to 91.05from 90.73per cent the last sessions. The 364 days tenure attracted bids worth 303.42bn/- compared to 100bn/- offered to the market and at the end 135bn/- was retained as successful amount.
The 182 days offer attracted bids worth 41.5bn/- compared to 65bn/- offered to the market for bidding and 38bn/- was kept as successful amount.