Dar es Salaam. Investors are showing low appetite for short-term Treasury securities, with the latest auction by the Bank of Tanzania (BoT) receiving zero subscriptions for both the 91-day and 182-day Treasury bills.
Meanwhile, according to the central bank auction done on March 13, 2025, demand for long-term securities remains strong, particularly for the 364-day Treasury bill, which was oversubscribed by 333.69 percent.
According to the analysis done by brokerage firm Zan Securities Limited, the shift in investor preference highlights a growing trend towards longer maturities, as market participants seek better yields and stability in a declining interest rate environment.
According to the auction results, BoT had offered Sh900 million for the 35-day Treasury bill, Sh1.9 billion for the 91-day Treasury bill, and Sh2.9 billion for the 182-day Treasury bill.
BoT also offered Sh102.8 billion for the 364-day Treasury bill.
While the 35-day Treasury bill was fully subscribed, demand for the 91-day and 182-day bills was nonexistent, marking the third consecutive time this year that the 182-day bill received no subscriptions.
This trend underscores investor reluctance to lock funds in short-term instruments amid an evolving market landscape.
“Demand in short-term maturities has been inconsistent, and this auction reinforces the ongoing preference for longer-term securities,” said Isaac Lubeja, Advisory and Research Manager at Zan Securities Ltd.
Managing liquidity
Meanwhile, despite significant investor interest for the 364-day Treasury bill, the BoT only accepted 31 percent of the bids received, reflecting a strategic effort to manage liquidity.
The weighted average yield for the 364-day bill dropped by 97.6 basis points, falling from 11.72 percent in the previous auction to 10.74 percent, continuing a downward trend observed since December 2024.
This decline suggests that yields are adjusting to current market conditions, with investors anticipating further rate movements.
Additionally, BoT raised the price floor for the 364-day bill from 89.44 to 90.11, signalling its commitment to controlling excess liquidity and maintaining an orderly market.
The latest inflation rate of 3.2 percent in February 2025 further supports expectations of a low-interest-rate environment.
The overall outlook according to the analysis is that the fixed-income market continues to experience shifts, particularly at the short end of the yield curve.
Since the beginning of the year, the one-year Treasury bill yield has dropped by 203 basis points, reinforcing expectations of a low-yield environment for short-term securities.
The introduction of market-determined coupon rates by BoT earlier this year has helped smooth out the yield curve, but the short end remains under pressure.
“We expect a continued downward trend in yields, particularly on the long end, as demand outpaces supply,” Lubeja explained.
“However, this is likely to stabilise in the coming months as the reopening of existing bonds increases supply in the market.”
Dar bourse performance
The Dar es Salaam Stock Exchange (DSE) experienced a 28.65 percent decline in turnover, closing at Sh6.14 billion for the week ending March 14, 2025, down from Sh8.61 billion the previous week.
Market activity was primarily driven by Tanzania Breweries Limited (TBL), which accounted for 55.34 percent of the total market turnover.
CRDB Bank contributed 22.25 percent, while NMB Bank represented 9.19 percent of the overall market turnover.
Despite the lower turnover, investors remain cautiously optimistic as the market awaits audited financial results for companies with a December 31 year-end.
“Market activity was subdued this week, with price movements recorded on only three counters,” said Lubeja.
“Investors are looking ahead to the final week of March when financial results will be released.
Strong price reactions are expected, which could push domestic market capitalisation past the Sh13 trillion mark for the first time.”
