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Tanzania: 20-Year-Bond Yield Falls As Predicted

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THE 20-year-Treasury bond average yield to maturity dropped as debt analysts projected.

The weighted average yield to maturity lowered by 12.38 basis points (bps) to 15.3874 per cent, thus pushing weighted average price by 51.68bps.

Orbit Securities said in a Weekly Market Synopsis on Monday that the bond minimum successful prices appreciated by 6.13bps to 100.00 per cent, while the highest bid price lowered by 59bps to 103.41 per cent.

The bond was also oversubscribed since BoT offered 136bn/-, but the public tendered 215.67bn/- instead. At the end of the day the government accepted 150.53bn/- equivalent to 110.7 per cent of the offer size.

The yield, according to some debt analysts, declined as the bond, in recent auctions, was sold at or above the premium price, following huge investors’ appetite.

The minimum successful prices appreciated by 6.13bps to 100.00 per cent, while the highest bid price lowered by 59bps to 103.41 per cent.

Tanzania Securities predicted then in a Weekly Market Blast on Monday that the yield rate for long-term securities would slightly decline, but oversubscription loomed large.

“… oversubscriptions are expected since this [20-year] instrument is most popular and highly demanded due to higher returns in terms of coupons,” Tanzania Securities said.

Zan Securities, another brokerage firm, projected that the 20-year-bond would attract interest from investors.

Zan Chief Executive Officer Raphael Masumbuko said: “We expect next week’s auction for 20-year-Treasury bond to garner much interest from investors.”

The downward yield trend followed significant auction oversubscription, meaning falling rates across all papers since the beginning of the year.

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.

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