AfricaPress-Tanzania: THE 15-year Treasury bond echoed analysts’ projections of under subscription and yield growth during last week’s primary market.
The Bank of Tanzania (BoT) borrowed 122bn/- from members of the public through a 15-year Treasury bond, but ended collecting 94.91bn/- and 18 per cent below the target.
During the mid-last week auction, the weighted average yield increased to 13.57 per cent from 13.53 per cent in the previous auction.
While the weighted average price (WAP) for a successful bid was 99/74 and minimum successful price was 97/52, the highest and lowest bid was 103/00 and 81/28, respectively.
Orbit Securities, a leading stock and debt brokerage firm, said in its weekly market synopsis that despite the highest bid price the average yield for the 15 years bond raised merely 4.39 basis points (bps).
“Despite an increase in the highest bid price compared to the previous auction, the weighted average coupon yield just went up by 4.39bps due to a rise in the weighted average successful price,” Orbit said yesterday.
The weighted average yield to maturity also went up by 4bps to 13.574.
Last week, debt analysts had predicted a slight increase of yields for the 15-year Treasury bond due to low liquidity level in January.
The analysts said the low money in circulation in this month would lead to a price drop of government long-term securities, which in turn would push yields up.
Zan Securities Chief Executive Officer Raphael Masumbuko projected that the yield increase based on last week Treasury bill results after its prices dropped.
“We forecast an increase in yield in the next week’s auction for 15-year Treasury bond due to this week Treasury bill results, where prices for bills’ decrease.
“We think liquidity is somehow low this month,” Mr Masumbuko said.
Tanzania Securities also said in its Weekly Market Blast that there could be a slight increase in the WAY for long-term instruments.
“…But with a likelihood of oversubscription since investors are looking for the higher return with the modest risk, which brings demand for treasuries higher,” Tanzania Securities said.
Orbit said the first auction in this year for the two-year government bond was massively undersubscribed and pushed up yields.
The two-year instrument was undersubscribed by 71.7per cent compared to the one held last August which was oversubscribed by 3.5 times the offer amount.
During the auction, BoT offered the usual 122.5bn/- while members of the public tendered 34.63bn/-.
