AfricaPress-Tanzania: The 7-year Treasury bond is projected to be under subscribed today despite high appetite for government securities.
The Treasuries, especially after the outbreak of coronavirus contagion, have been attracting a number of investors who are shielding their investment as other securities returns plummeting.
Tanzania Securities said in its weekly market blast report yesterday they expected to see under subscription of the 7-year bond despite higher appetite of government securities since investors preferred long tenure instruments with one goes on sale in next two weeks.
“This is because the investor’s prefer higher coupon bonds, unlike these medium-term bonds. “…Also the fact that in two weeks there will be an auction for 20-year bond hence investors are likely to hold and wait for it,” Tanzania Securities said.
Similarly, Tanzania Securities pegged their projection to the past sale of 7-year bond, which was under subscribed by 17.5 per cent last October where the same reasons may still make investors to shun the instrument.
“From the previous auction held on 23 October 2019, we may see under subscription of this bond despite higher appetite of government securities,” the brokerage firm said.
However, Tanzania Securities projected the yield curve to continue to remain normal while average weighted yield to decline.
“This indicates that the government has the chance to raise funds at the cheapest cost during this time of pandemic,” Tanzania Securities report said.
NMB Bank said the first quarter of this year a significant oversubscription in the auctions was experienced, minus 7-year bond, to see rates falling across all papers in quarter-to quarter (Q-o-Q).
“In line with our expectations, market activities remained stable in the reviewed quarter in comparison to the last quarter of 2019,” NMB said in Market Digest report.
Q-o-Q, the 2-year bond yield fell to 8.34 per cent from 11.08 per cent while 10-year dropped to 12.90 per cent from 14.53per cent.
Other bonds the 15-year and 20-year fell to 14.54 per cent and 16.22 per cent in the reviewed quarter from 15.24per cent and 16.76per cent respectively.
Last Wednesday, Treasury bill sale was oversubscribed by merely 0.13 per cent despite increased appetite on tenors below 364 days.
Bank of Tanzania offered Treasury bills worth 107.2bn/- and the public tendered a total of 107.35bn/-. The central bank accepted a total of 82.19bn/- which was 23 per cent lower than the tender size.
