Investors’ appetite for treasury bills still high

DESPITE a drop of average yield rate, treasury bills have continued to attract more investors leading to oversubscription.

According to a weekly market commentary by the Tanzania Securities Limited (TSI), this is a continuation of a long trend where demand for capital and money market products remained higher.

The average yield rate has dropped from 6.4 to 5.7 per cent. “This is an indication that the market possesses relatively significant amount of liquidity without a good matching from the investment aspect,” said Mr Moremi Marwa, the TSI Chief Executive Officer and also the
report analyst.

The Treasury Bills auction summary conducted by the Bank of Tanzania on Tuesday shows that there was 147.3bn/- oversubscribed against an offer of 100bn/-. The government offered 10bn/- for 35 days but was oversubscribed by 9.2bn for 91 days - 26.8bn/- oversubscription
against 35bn/- offered, 182 days 49bn/- oversubscription against 35bn/- offered and
51bn/- oversubscription against 30bn/- on offer.

The Tuesday Bills auction summary indicates that both short and long term maturities were attractive compared to last week’s auction where only long term maturities attracted more
investors. The auction also shows that there is a shortage of investment opportunities to satisfy investors’ demand resulting into huge sum of money being kept at home.

Also the government appetite to borrow to cover for deficiency in the recurrent and development budget is mentioned as one of the factors attracting investors rush for annual treasury bills.

Over 60 per cent of the investors are commercial banks. Others are pension funds, insurance funds and few micro finance institutions. The number of retail investors in Tbills is below 5 per cent.

There are at least seven corporate bonds, the number which is small compared to Kenya that has more than 30 corporate companies issuing bonds


SEBASTIAN MRINDOKO, 3rd March 2011