Author: ABDUEL ELINAZA
AfricaPress-Tanzania: THE 15-year Treasury bond coupon rate of 13.5 per cent is the highest in two years before the introduction of longer tenure bond.
The bond was the most loved government securities, but investors shun the bond to the longer tenure of 20 years which at the last auction fetched 15.49 per cent.
Orbit Securities said in its weekly market synopsis report that the appetite for the 15-year bond resurfaced two years after the introduction of 20 years bond last Wednesday.
“Appetite reemerged to skyrocket again in the previously most valued Treasury bond, before the introduction of the 20 years T-bond in September 2018,” Orbit report said.
The leading stock brokerage firm said on Monday that the 15 years T-bond coupon rate of 13.5per cent “was the most fetched Treasury security” prior to the introduction of the 20 years T-bond which has a coupon rate of 15.49 per cent.
Mid-last week, the Bank of Tanzania (BoT) offered a 15-year bond worth a total of 122bn/- while the public tendered a total of 222.288bn/-, marking an oversubscription rate of 82 per cent.
“Despite the oversubscription, the Bank accepted 21.5 per cent less than the offer,” Orbit said.
Despite the oversubscription, the total successful amount was 95.78bn/-.
The high appetite and lower acceptance by the Bank of Tanzania lowered the weighted average yield to maturity (WAYTM) by 46.7bps to a WAYTM of 13.83 per cent.
The WAYTM of the 15 years T-bond was 15.67 per cent during a similar period last year.
“The descending of the WAYTM is a deliberate move by the central bank to lower the cost of debt for the government,” Orbit said.
However, the firm said limited viable alternatives in the financial markets have pushed investors to increasingly opt for Treasury securities as safer and more profitable investment destination.
“[Thus] BoT used the opportunity to substantially lower the government’s cost of borrowing,” Orbit said.
