According to NMB e-markets report, the poor results have been attributed to the resumption of the tight liquidity stance by the Bank of Tanzania (BoT). “BoT has accepted only 84.56bn/- of the 94.44bn/- tendered in the auction which was undersubscribed by 5.5 per cent, signalling tight liquidity stance,” stated the report.
The report says that the rate of return for the 91-day offer was hiked to 12.34 per cent compared to 11.74 of the previous dealing. The interest rate for the 182-offer was also raised to 12.75 per cent and matched up to 12.26 per cent of the last Treasury bills trading. The interest rate for the 364-day bid was raised to 13.38 per cent compared to 12.38 per cent of the previous market. But the interest rate for the 35-day offer was brought down to zero per cent.
The Treasury bills trading session conducted on January 4 this year was undersubscribed by 25.8bn/- despite the high rate of returns that approached 20 per cent. Analysts attribute the rising interbank rates that averaged 19 per cent this week as one of the major causes for the poor performance.
“Commercial banks, the main players in short term Treasury bills maturities prefer to invest in interbank trading due to high returns offered,” said Mr Joel Nkya, a business analyst with Tanzania Securities Limited (TSL). The commercial banks command a 60-per cent of the market share in the short term maturities investments with pension funds and insurance firms holding the rest.
He also mentioned the rising interest rates on interbank borrowing that hit 20 per cent this week as one of the factors that drove away investors’ appetite on treasury bills. Likewise, the upcoming tax obligations for the 2012 first quarter to be fulfilled by investors are attributed to the cause of the under subscription.