{"id":38761,"date":"2021-10-15T17:00:36","date_gmt":"2021-10-15T17:00:36","guid":{"rendered":"https:\/\/www.africa-press.net\/tanzania\/?p=38761"},"modified":"2021-10-15T15:35:45","modified_gmt":"2021-10-15T15:35:45","slug":"25-year-bond-yields-drop-40bps","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/tanzania\/all-news\/25-year-bond-yields-drop-40bps","title":{"rendered":"25-year bond yields drop 40bps"},"content":{"rendered":"

Africa-Press<\/a> – Tanzania<\/a>. <\/strong><\/span>The 25-year government bond has been met with robust investor demand, hence sending down yield rates by over 40 basis points (bps) below its level over two months ago.<\/p>\n

The bond auction results echoed the projections of the debt market analysts who predicted the paper\u2019s oversubscription and yields dropping. The bond was to oversubscribe by five times.<\/p>\n

The Bank of Tanzania (BoT) on Wednesday auctioned the third 25 years bond by offering 133.45bn\/-, but the auction was oversubscribed by 503bn\/-equals to 376 per cent.<\/p>\n

Zan Securities in its Market Update to analyse the bond said despite the high bids, BoT rejected bids which they deemed aggressive, took up only 182bn\/-.<\/p>\n

\u201c[This] ultimately reducing borrowing cost as the weighted average yield to maturity recorded was 15.48 per cent lower than the 20-year Treasury bond coupon paying 15.51 per cent,\u201d Zan said yesterday.<\/p>\n

The 25-year bond yield to maturity also dropped to 15.48 per cent as average price climbed to 102\/82, which was highest premium price since the introduction of bonds over a decade and half ago.<\/p>\n

Zan said so far this year fixed income returns have been modest, yields have fallen to historical lows to reflect the inverse relation with prices although there have been pockets of strength as investors search for yield.<\/p>\n

\u201cWe believe the outlook for economic growth in the quarter of the year is strong and expect intermediate- and long-term Treasury rates to move modestly higher,\u201d the report said.<\/p>\n

The oversubscription of the 25-year bond comes with no surprise, auctions for the long term treasury bonds\u201420 and 25\u2014have been oversubscribing since their respective introductions in the financial markets prompted by their attractive coupons and subsequent liquidity in the secondary markets.<\/p>\n

The 20 year bond accounted for 46 per cent of trades in the secondary market last month\u2014showing its attractiveness to investors.<\/p>\n

However, some debt analysts are saying, investor flight towards fixed income securities comes with peril to the economy, as these crowds out much needed funds for the private sector; since the reason is a large percentage of institutional investors buying bonds are commercial banks.<\/p>\n

\u201cThe banks are using excess liquidity which could potentially be lent out to the private sector subsequently lowering lending rates,\u201d the report said.<\/p>\n

Nevertheless, the BoT manually performs the liquidity reallocation process through monetary policies.<\/p>\n

This is well illustrated by tendencies of the central bank to take only a fraction of tendered amount thus successful lowering yields forcing banks to channel the excess liquidity back to the economy.<\/p>\n

The prices of bonds have come a long way since the 20 years was introduced which was 87\/90. The shift in tide is visible as prices began trading in premium within three years to date.<\/p>\n

\u201cPrimary and secondary market yields on similar or identical instruments are highly correlated; high prices in the primary market will subsequently affect prices in the secondary market,\u201d Zan said.<\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – Tanzania. The 25-year government bond has been met with robust investor demand, hence sending down yield rates by over 40 basis points (bps) below its level over two months ago. The bond auction results echoed the projections of the debt market analysts who predicted the paper\u2019s oversubscription and yields dropping. The bond was […]<\/p>\n","protected":false},"author":84,"featured_media":38760,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,5,8,16],"tags":[6990,6991,711],"class_list":["post-38761","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economy","category-homepage-english","category-twitter","tag-africa-press-2","tag-africa-press-tanzania","tag-tanzania"],"yoast_head":"\n25-year bond yields drop 40bps - Tanzania<\/title>\n<meta name=\"description\" content=\"The 25-year government bond has been met with robust investor demand, hence sending down yield rates by over 40 basis po ...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/tanzania\/all-news\/25-year-bond-yields-drop-40bps\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"25-year bond yields drop 40bps\" \/>\n<meta property=\"og:description\" content=\"The 25-year government bond has been met with robust investor demand, hence sending down yield rates by over 40 basis po ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.africa-press.net\/tanzania\/all-news\/25-year-bond-yields-drop-40bps\" \/>\n<meta property=\"og:site_name\" content=\"Tanzania\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/AfricaPressTunisiaa\" \/>\n<meta property=\"article:published_time\" content=\"2021-10-15T17:00:36+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.africa-press.net\/tanzania\/sites\/17\/2021\/10\/img-61699fba1b8c7.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1920\" \/>\n\t<meta property=\"og:image:height\" content=\"1272\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"cfeditoren\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"cfeditoren\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.africa-press.net\/tanzania\/all-news\/25-year-bond-yields-drop-40bps#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/tanzania\/all-news\/25-year-bond-yields-drop-40bps\"},\"author\":{\"name\":\"cfeditoren\",\"@id\":\"https:\/\/www.africa-press.net\/tanzania\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\"},\"headline\":\"25-year bond yields drop 40bps\",\"datePublished\":\"2021-10-15T17:00:36+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/tanzania\/all-news\/25-year-bond-yields-drop-40bps\"},\"wordCount\":481,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/tanzania\/all-news\/25-year-bond-yields-drop-40bps#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/tanzania\/sites\/17\/2021\/10\/img-61699fba1b8c7.jpg\",\"keywords\":[\"Africa Press\",\"Africa Press-Tanzania\",\"tanzania\"],\"articleSection\":[\"all news\",\"Economy\",\"homepage-english\",\"twitter\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.africa-press.net\/tanzania\/all-news\/25-year-bond-yields-drop-40bps#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.africa-press.net\/tanzania\/all-news\/25-year-bond-yields-drop-40bps\",\"url\":\"https:\/\/www.africa-press.net\/tanzania\/all-news\/25-year-bond-yields-drop-40bps\",\"name\":\"25-year bond yields drop 40bps - 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