Tanzania Treasury bill demand slumps at auction

Investors retreated sharply from weekly Treasury bill sales in September, pushing up short-term Tanzania borrowing costs in the commercial banks.

The Bank of Tanzania was in August 2013, the market was supplied with Treasury bills worth Tsh 290 billion ($180 milli0n) compared to Tsh 415 billion ($258 million) that was supplied in the preceding month.

Demand declined to Tsh 261.6 billion ($162 million) compared to Tsh 382.3 billion ($238 million) recorded in the preceding month.

The Bank intervened and accepted bids worth Tsh 246.7 billion ($153 million).

During the month, the overall weighted average yield (WAY) rose to 14.48 percent from 14.20 percent recorded in the previous month.

However, during August 2013, the Bank conducted two Treasury bond auctions of 5-year and 7-year maturity worth Tsh 25 billion ($15 million) and Tsh 20 billion ($12 million), respectively.

The demand was Tsh 70.7 billion ($43 million) for the 5 year bond and Tsh 13.9 billion ($8 million) for the 7 year bond and the Bank accepted bids worth Tsh 27.2 billion ($16.8 million) and Tsh 13.9 billion ($8 million) respectively.

Weighted average yields for the 5-year Treasury bond decreased to 14.07 percent from 14.86 percent which was recorded in the preceding auction, while the yield for the 7 year bond remained stable at 15.76 percent.

However Commercial banks’ activities in the interbank money market rose significantly in August 2013, registering a total turnover of Tsh 1,346.7 billion ($839 million) from Tsh 1,035.9 billion ($645 million) recorded in July 2013.

Overnight transactions also increased to Tsh 1,166 billion ($727 million) compared with Tsh 868.2 billion ($541 million) transacted in the preceding month.

The overnight and overall interbank money market rates declined to 6.16 percent and 6.32 percent in August 2013 from 10.18 percent and 8.70 percent recorded in the preceding month, respectively.