Africa-Press – Tanzania. Some debt analysts are predicting that the yield rates for the 10-year Treasury bond will improve northward.
The analysts, who remained silent on the bond’s subscription level, have it that the yields are projected to climb albeit slightly when the bond goes under the hammer today after plummeted during Treasury bill auction mid-last week.
Vertex International Securities said in its weekly market report that following the mid-last week yields drop of Treasury bills, it is anticipated that the 10 years bond will improve slightly.
“We expect a slight improvement in yields in next week’s auction results for 10–year Treasury bond,” Vertex report said on Tuesday.
The last 10-year government bond sold in March was undersubscribed as the public tendered 36.03bn/- compared to 133bn/- BoT sought to rise at an average price of 99/05. Thus, the average yields to maturity improved slightly from 11.44 per cent to 11.60 per cent while the average coupon rate also increased to 11.54 per cent.
The central bank, at the end of the day, took merely 2.01bn/- as successful bids leaving almost 34bn/- at the table.
The mid-last week Treasury bills auction results, according to Vertex, followed the trend of yields decline despite the under subscription.
Also, the 364-days bill has continued to outperform the shorter tenures namely 35-day, 91-day, and 182-day. Zan Securities said in its Weekly Market Wrap-Ups report the bills weighted average yield continued to drop as the 364-day bill dropped by 8 basis points to 3.62 per cent.
“[We think] the central bank continues to restrict yields for Treasury bills to further stimulate reallocation of funds to the economy,” Zan said in the report on Tuesday.
Orbit Securities said in its weekly market synopsis that the bills yield dropping started since last year when the central bank embarked on pushing for lower lending rates.
“Yields for Treasury bills have been dropping since last year as the Bank of Tanzania is pushing for lower interest rates in the economy … [to] maintain an expansionary monetary policy,” Orbit said.
Mid-last week 1.1bn/- was offered for the 35-day maturity Treasury bill while 1.8bn/- was offered for the 91-day bill, also offered 3.1bn/- and 72.92bn/- for 182-day and 364-day maturities respectively.
However, only the 364 days tenor was available in the Treasury bills.
The 364-day auction was significantly undersubscribed as the tender size from the public amounted to 12.27bn/- marking an under subscription rate of 16.83per cent.
