Africa-Press – Tanzania. 15-year Treasury Bond has been oversubscribed for the first time since the beginning of this year, picturing that yields for longer tenure instruments are unlikely to go up.
The bond that went under the hammer on Wednesday was the fifth in this year and was oversubscribed by 16 per cent, pushing price up and lower yield rates.
The first four in January, February, June and September were all undersubscribed. The auction result showed that investors tendered 157.8bn/-, slightly above the targeted 136bn/-, with the Central Bank taking up 145.7bn/-.
Zan Securities said on Thursday on its special bond auction report that the oversubscription was highly influenced by the 20 and 25 years Treasury Bond results, where majority of bids were unsuccessful due to relative high price, thus leaving the 15-year paper as the next available attractive coupon.
“The rush for the bond is also indicative of market expectations that yields for the 20 and 25 years bond are unlikely to go up in the short-term due to the high price levels,” Zan Securities said.
The stockbrokerage firm forecasted that the premium prices for 20 and 25 years bond will push investors to look for relatively lower tenure bonds.
“We believe the high prices of the 20 and 25 year papers will continue to drive investors towards treasury bonds that are relatively cheaper and with an attractive coupon such as the 15 year Treasury Bond,” Zan said.
The Bank of Tanzania sought to raise a 15 year Treasury bond at 13.5 per cent annual coupon.
However, the oversubscription pushed up prices to record the highest at premium 104/-.
The average price was 99/5432 at almost the same coupon and maturity yields at 13.56 per cent.
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