Demand for Tanzania's government securities is fading, according to BoT figures

Aug 06, 2014

Investors' appetite for Tanzania's 12-month treasury bills is decreasing, according to figures from the Bank of Tanzania (BoT).

Investors' appetite for Tanzania's 12-month treasury bills is decreasing, according to figures from the Bank of Tanzania (BoT).

The institution released an auction summary showing
that a total of Sh135 billion (€60.7 million) was offered to the market but managed to attract bids worth
Sh98.11 billion, with successful bids only reaching
Sh52.67 billions.

According to Tanzania Securities Limited's
(TSL) weekly market commentary,
low liquidity among commercial banks that are among the most active players in the money market
is one of the reasons for the under subscription, Tanzania Daily News reports.

A few weeks earlier, US rating agency Standard & Poor's (S&P) said that the financial costs associated with the issuance of eurobonds will now be greater for African countries.

Reductions in the Fed’s monetary stimulus that injected cheaper cash into developing-nation assets is also changing the conditions of issuance for countries with struggling economies.

“The heydays of bond offerings from newcomers or from frontier markets, like the African issuers we have seen over the last couple of years
have ended", said Konrad Reuss, Head of S&P’s sub-Saharan Africa unit.

Periods of “oversubscribed bond offerings and very narrow, very tight spreads are over,” he added.ADNFCR-2976-ID-801740197-ADNFCR