ANALYSTS PREDICT TEN-YEAR BOND YIELDS DROP

AfricaPress-Tanzania: The ten-year government bond is expected to post a positive performance in today’s auction since banks need the instrument for liquidity purposes.

The government wants to raise 110bn/- at a coupon rate of 11.44 per cent per year, but debt analysts projects an oversubscription accompanied by slight yields decline.

Zan Securities Chief Executive Officer, Raphael Masumbuko said the bond will receive a good response form investors pushed by banks, unlike the last week Treasury bill.

“We expect the 10 – Year Treasury Bond to post a positive performance, contrary to what we saw during this week’s Treasury bill auction, as institutional investors, especially commercial banks need this bond for liquidity purposes,” Mr Masumbuko said in the firm’s Weekly Market Wrap-up.

On a quarterly basis in three months to June, all bonds, with an exception of a 2-year auction that was cancelled, 10-year and 15-year and 20-year-yield rate fell between 0.20 per cent and over 1.50 per cent.

Tanzania Securities on its Weekly Market Blast said the bond is expected to be oversubscribed, thanks to higher appetite for long-term instruments among investors.

“…The yields in the long-term securities are expected to slightly decline during the auction,” Tanzania Securities said.

Furthermore, the brokerage firm said “the government securities yield curve will continue to remain normal”.

Last week, Orbit Securities said the central bank offered a total of 90.23bn/-in a Treasury bills auction which was undersubscribed by 71 per cent.

The total tender size amounted to 25.96bn/- from a total of 31 bids, while in a change of scenery, all tenors saw subscriptions different from recent auctions.

The Bank of Tanzania accepted all bids worth 25.96bn/- while the 35 days, 91 days and 182 days were fully subscribed.

The weighted average yield to maturity (WAYTM) of the 364 days rose by 35bps to 4.35 per cent.

The WAYTM of the 35 days, 91 days and 182 days was 1.99 per cent, 2.42 per cent and 2.58 per cent respectively.

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