AfricaPress-Tanzania: INVESTORS’ participation in auctions of debt instrument is forecasted to slow down this quarter due to impact of coronavirus as well as the winding up of the current government budget.
In its latest Market Digest, NMB Bank which is one of the largest lenders in the country attributed their forecast analysis to slowing-down economic activities following the outbreak of Covid-19 and end of budget year in next month.
The Dar es Salaam Stock Exchange (DSE), listed NMB bank said that in this quarter (Q2) all bonds will be auctioned with an exception of a 10-year paper.
“With expected slow-down in economic activities brought by Covid-19, this together with end of government’s fiscal year investors’ participation in auctions could decline,” the lender’s report said.
Since the second quarter begins last month, three bonds, 15 years, 20 years and 7years, where auction and all were oversubscribed, though appetite and yield rates dropped.
Orbit Securities said fortnight ago when analysing 20 years bond sale that the instrument received 440 against 566 bids in February. On yields, Orbit report showed the weighted average yield to maturity for 20-year bond lost 44.4bps to 15.8537per cent.
Tanzania Securities analysing the 20 years bond late month sale said: “Yield curve may continue to remain normal and weighted average yields are expected to decline due to higher appetite of the government papers,”
Nevertheless, NMB Market Digest report said market activities remained stable in this year’s quarter one in comparison to the last quarter of 2019.
Market traded bonds worth of 489bn/-up from 323bn/-in the previous quarter to mark a 51 percent growth quarter-to-quarter (Q-o-Q).
NMB said an improvement in activities was partly explained by favourable market liquidity situation and an appetite for investment by investors to lock in returns as the year kicked off.
“Also with uncertainties arising from Covid-19 effects, some investors shifted from stock market to government securities market,” the Market Digest said.
The bank expected market situations on secondary market activities to remain stable in this quarter two.
There are three bonds expecting to go on sale before this quarter ends—20 years, 15 years and 5.0 years in that order.
