Africa-Press – Tanzania. THE 20-year Treasury bond has been slight oversubscribed while yields rate continues to drop as investors focusing on end of year festivals.
The debt analysts predicted right last week that the bond will be slight oversubscribed and cautioned over declining of average yields.
The bond in Wednesday auction was oversubscribed by over 60 per cent to 218.76bn/- compared to 136bn/- the government wanted to borrow from the public.
Tanzania Securities predicted on its Weekly Market Blast report on Tuesday about slight increase in the average price and decrease of yields for the 20-year bond.
“… [There is] high likelihood of oversubscription but at minimal amount compared to previous auctions,” Tanzania Securities said.
The stock brokerage firm projected a slight increase of weighted average yields (WAY) with “low volatility towards decline in yields for the long-term instruments due to obligations in this festival.”
The 20 years treasury instrument was sold at premium price of 100.6663 which was historical highest weighted average price.
The high price pushed down yields rate to 15.3875 per cent minutely up compared to previous yields of 15.3874 last month.
Zan Securities projected right the yield rate to increase albeit sight and appetite to push up demand during the Wednesday auction.
“…Yield is expected to increase, albeit slightly,” Zan said in its weekly market wrap-up last week and added: “We expect the next week’s 20 – Year Bond to oversubscribe owing to investors’ appetite…” “The demand for this instrument is still high and it’s expected to remain high in the coming auction,” Tanzania Securities said.
The downward yield trend followed significant auction oversubscription, meaning falling rates across all papers since the beginning of the year.
For the 20 years bond the yield rate started to fall while price increase since the beginning of the year.
For instance in July, yield rate was 15.63 per cent and fall to 15.5112 per cent, November 15.3874 per cent before climb minute to 15.3875 per cent in December auction.
On a quarterly basis in three months to June, all bonds, with an exception of a 2-year auction that was cancelled, 10-year and 15-year and 20-year-yield rate fell between 0.20 per cent and over 1.50 per cent.
