The 364-day Treasury bill has emerged as a favorite among investors due to its impressive return on investment, posing a significant challenge to bank deposits. In the recent auction, the one-year yield experienced a steady increase, rising by 48 basis points from 6.74% last month to 7.22% in the mid-last week auction.
According to Ramadhan Kagwandi, the Chief Executive Officer of Exodus, the demand for the 364-day tenor remained strong as it was oversubscribed by 96.58%. In contrast, the junior bills either experienced low subscriptions or received none at all. This continued demand for the 364-day bill indicates its popularity among investors, as highlighted in the firm's weekly market report.
Although the 182-day bill was undersubscribed, its yield grew by 40 basis points, reaching 5.40% compared to 5.0% in the previous auction. Investors bid 38 billion Tanzanian shillings out of the 69.9 billion shillings offered by the central bank for the 182-day bill, while the 91-day bill faced poor subscription with only 2.2 billion shillings tendered against the 19.9 billion shillings sought.
Exodus CEO noted that there were no tenders for the 35-day Treasury bills, while both the 91-day and 182-day bills were undersubscribed. This trend has implications for commercial banks' deposits, as highlighted by Ammi Julian, an Investment Analyst at Orbit Securities. The increasing yields on Treasury bills make them more attractive to investors seeking higher returns, potentially leading individuals to withdraw funds from fixed deposit or savings accounts in favor of Treasury bills offering the potential for higher interest rates.
Vertex International Securities, in its weekly market review, stated that the auction results for the bills aligned with their predictions, as yields experienced an upward movement. They also forecasted a slightly underperforming 10-year Treasury bond auction in the future.
Zan Securities, in its weekly market wrap-up, observed that the 35-day maturity bill received no subscriptions in the recent auction, despite being oversubscribed in the previous one. This inconsistency in demand over the last three auctions suggests mixed market signals. Furthermore, the 91-day bill received subscriptions for only 11% of the offered amount, while the 182-day bill garnered 54% of subscriptions. In the previous auction, neither of these maturities received any bids. However, Zan Securities anticipates a forthcoming shift in investor preferences towards fixed-income securities as several counters enter the ex-dividend period. Overall, the market outlook for the coming weeks appears cautiously positive, according to Zan Securities.