The auction results posted by the Bank of Tanzania (BoT) show that the total amount tendered jumped to 72.89bn/- compared to 55bn/- offered to the market for bidding. However, the government ended up taking 71.37bn/- as successful amount, a sign that some bidders tendered below price offered.
A total of 41 bids were received in the market and 37 emerged successful. Further decline of yield rates across all government securities did not prevent the 10-year bond to be overly subscribed. The session witnessed a drop of interest rates to 14.27 per cent compared to 15.81 per cent of the previous market.
The market also saw the average coupon yield falling to 13.44 per cent compared to 14.59 per cent offered in the preceding session 10-year bond maturities. The government use debt instruments to mobilise money from the public for both short and long term investment purposes.
The instruments particularly treasury bills are used to regulate the amount of money in circulation. The gradual decline of the annual headline inflation which in the month of February, according to the National Bureau of Statistics (NBS), reached 10.4 per cent, is one of the factors behind positive performance of the government securities, in particular the 10-year treasury bonds.
Over 60 per cent of the key players of long term maturities are commercial banks, with only five per cent as retail investors. Others are pension funds, insurance companies and a few micro-finance institutions.