INVESTORS APPETITE FOR TREASURY BILLS UP

Despite the oversubscription, the liquidity squeeze in the circulation is attributed to slight fall of the total amount tendered in the treasury bills auctioned by the Bank of Tanzania (BoT) last week compared to the preceding session.

According to the NMB Bank e-market report, liquidity in the local money markets remains tight as demand for short-term funds is seen trending higher, with interest rates trading upwards 6 per cent.

Most institutions and corporations are converting hard currency for month-end local payments. Some of the key investors in the treasury bills constitute commercial banks, pension funds, insurance firms and few microfinance institutions.

This is the fourth treasury bills auction to record an outstanding performance. The BoT auction summary shows that the total amount bids declined to 162.18bn/- compared to 210.10bn/- total tendered in the session held two weeks ago.

Of the four tenors, the 364 and 182 days offers attracted total bids worth 148.42bn/- slightly lower than 197.56bn/- while the 91 and 35 days failed to breakthrough the amount offered for tendering and were undersubscribed.

The two collected bids worth 13.76/- only. Notwithstanding the fluctuations, the improved market situation gives signal of high liquidity in the circulation with investors’ high appetite questing for few investment opportunities.

At the end bids valued 151.42/- got through as successful amount. In the 364 days offer bids worth 81.49bn/-were tendered up from 65bn/- offered to the market for bidding. At the end total amount tendered was retained as successful amount.

For the 182 days tenor, bids worth 66.92bn/- were tendered up from 52bn/- that was placed to the market for bidding and was retained at the end as successful amount.

The highest and lowest bid/100 for the 364 and 182 days offers were 93.91/93.09 and 88.40/ 86.54 respectively while 91 and 35 days tenor had 97.60/ 97.87 and 99.30/ 99.30 respectively.

The weighted average interest rate on the 364 days was 14.56 per cent slightly up compared to 14.34 per cent of the previous session held two weeks ago.

On 182 days, interest rate rose slightly to 13.86 per cent compared to 13.68 per cent while the 91 days offer increased slightly to 8.34 per cent compared to 8.22 per cent. Interest rates for the 35 days offer were 7.35 per cent from 6.82 per cent.

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