BY BUSINESS REPORTER
BANK of Tanzania (BoT) has again rejected all bids at a Treasury bond sale this week for the second time in four months as investors sought high yields which the bank was unwilling to pay, traders said on Thursday.
The Bank of Tanzania received 17 bids worth 48.98 billion shillings at the sale of a seven-year Treasury bond worth 20 billion Tanzanian shillings ($12 million) on Wednesday. The bids ranged from 51.8136 to 76 shillings.
A similar seven-year Treasury bond went unsold on Aug. 24 at a coupon rate of 10.08 percent after investors offered bids ranging from 70 to 85.6194 shillings.
One analyst said the central bank was not willing to meet investors' demands for yields of above 15 percent.
"The yields that investors quoted were on the high side. The central bank doesn't like to commit itself on long-term debts at such high yields and prefers to sell short-term Treasury bills where one can get an 18 percent yield over one year," Moremi Marwa, CEO of Tanzania Securities Limited (TSL), told Reuters.
"Investors want yields close to the 17 percent inflation rate, but the central bank believes the inflation rate could retreat to single digits within the next three months if we get good rains and is thus not ready to tie itself up in expensive long-term debts."
Rising food and fuel prices helped push the country's inflation rate to 17.9 percent year-on-year in October from 16.8 percent a month earlier.
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