Dar es Salaam. The 20-year Treasury bond floated by the Bank of Tanzania (BoT) on Wednesday was massively oversubscribed, an indication of a strong appetite on long-term government debt instruments.
The auction results published by the BoT show that a total of 345 bids worth Sh153.9 billion were tendered against the offered Sh39.7 billion.
However, at the end of an auction, the central bank accepted 324 bids valued at Sh145.9 billion, which was beyond the offered amount. The funds are targeted to finance government expenditures.
The lowest bid was 71.7500/100, and the highest was 95.5439/100, but the central bank accepted the minimum successful price of 87.0205/100.
The auction results of the weighted average yields to maturity for the Wednesday’s bond was 17.39 per cent, lower than 17.44 per cent recorded during the similar bond auctioned on February 27, this year.
The coupon yield was also lowered to 17.31 per cent during Wednesday’s auction, lower than 17.37 per cent recorded during similar bond floated on February 27.
A similar trend was also experienced during a similar auction held on February 27 this year, whereby a total of Sh155 billion was tendered against the offered Sh39.5 billion.
At the end of the auction, the government, through BoT accepted Sh116.5 billion, which was beyond the targeted amount.
However, while the 20-year Treasury bills are receiving massive bids, other medium-term bonds, including those of five- and seven-year maturity floated this month and last month, were undersubscribed.
The reports show that the seven-year bond floated on April 25 this year was undersubscribed by Sh86 billion, as well as the five-year bond floated on May 8, which was also undersubscribed by Sh24 billion.