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BoT rejects lowly priced treasury bills

BoT rejects lowly priced treasury bills

The bank had sought to raise 100bn/- in the tender that attracted hefty investments apart from the tax obligations for the year’s first quarter by most key players in government securities. Although the market was expecting 38.45bn/- maturities in the week under review, it did not prevent the tender from being oversubscribed.

This, according to analysts is a sign that investors are awash with cash which do not match investment opportunities. Similarly, the acceptance of bids below the amount that the bank had thought to raise is one of the monetary strategies to regulate the amount of money in circulation.

Hiked interest rates of 14.4 per cent particularly for the 364 offer hooked investors’ appetite where 72.8bn/- was the total amount tendered against 35bn/- offered for bidding. For the 182-day offer, the central bank wanted to raise 30bn/- only but was oversubscribed by 7.02bn/- at 13.5 per cent interest rate. In the 91-day offer, the bank targeted 30bn/- but received over 42bn/- at 13.1 per cent rate of return.

The rising overnight lending rates ranging between 17 and 20 per cent was one of the major factors that could have discouraged investments on the treasury bills. “Commercial Banks, which are among the major investors in government securities prefer to invest on overnight transactions due to high returns offered,” commented the Tanzania Securities Limited (TSL).

Commercial banks have remained to be the giant investors in government securities contributing above 60 per cent of the total market share. Pension Funds, insurance and few microfinance institutions firms are among the key investment players in the instruments.

Rate of return has been one of the major determinants in drawing attention of investors’ appetite on the treasury bills auction although in the preceding tender, little changes were noticed despite hiked interest rates leading to under subscription. Similarly the BoT is expected to float 10.08 per cent, seven year fixed rate treasury bond tender today seeking to raise 23bn/-.

GEITA Gold Mining (GGM) has contributed over ...

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Mwandishi: SEBASTIAN MRINDOKO

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