Investors in financial markets smiled over the last 12 months, after the central bank (BoT) increased yields for government debt instruments for both liquidity and financing purposes by between 20 to 100 percent.

The central bank report shows that the domestic debt level also increased to 30.5trn/- during the year ended in January this year, from 26.4trn/- during the year ended in January 2023 and 20trn/- by January 2022.

Major investors of the government debt instruments, both short and long terms include commercial banks, pension funds, individuals (both local and foreign investors), investment funds and insurance companies.

The BoT’s monthly interest rate report shows yields for short term government debt instruments (Treasury bills) of different maturities from 35 days to 364 days have escalated between 60 to 100 percent.

The trend has therefore caused the increase of overall Treasury bill rate by nearly 100 percent to 12.21 percent in February this year, from 6.34 percent in February last year. 

Between January 2023 and January 2024, the central bank issued Treasury bills amounting to 1.9trn/- for financing purposes, compared to 2trn/- issued during the year ended in January 2023.

The interest rate for Treasury bills for 35 days maturity increased by more than 70 percent to 6.29 percent by January this year, from 3.49 percent in January 2023, while for 91 days maturity, the yield more than doubled to 8.43 percent, compared to 4 percent respectively.

The central bank report also shows that the yields for 182 days maturity T-bills reached to 8.93 percent in January this year from 5.23 percent recorded in January last year, while those of one year maturity went up to 12.25 percent from 7.12 percent.

For medium and long term debt instruments (Treasury bonds), the report shows that yields for different maturities have also increased by between 0.42 to 3.22 basis points.

The yields for 2-year maturity, which seems to be less attractive to investors than long term bonds of 20 and 25 years, increased to 11.64 percent in January this year, compared to 9.37 percent recorded in January 2023.

During last year, the central bank issued five auctions of two year Treasury bonds, which only two (April 25 and July 5) were oversubscribed while the remaining three auctioned in January, September, November 2023 and January 2024 were undersubscribed.

The report shows the yields for five year Treasury bonds also increased to 10.09 percent from 9.67 percent, while the interest rate for 10 years maturity reached to 12.03 percent, compared to 11.05 percent.

During the reported period, four auctions of five years T-Bonds were conducted in January, May, August and October by they all ended up undersubscribed.

Also, five auctions of 10 years T-Bonds held between January last year and January this year were also undersubscribed, according to auctions results posted on BoT website.

In a meantime, the yields for 15 years Treasury bonds went up to 13.66 percent from 11.43 percent in January last year, while the yields for 20 and 25 years maturity reached 15.83 percent and 14.39 percent respectively, from 12.61 percent and 12.76 percent respectively.

The reports show from January 2023 to January 2024, the central bank conducted six 25 years Treasury bonds, which were all oversubscribed due to investors’ appetites on long term government debts instruments.

The report shows between January 2023 and January 2024, the central bank has issued Treasury bonds of different maturities ranging from two to 25 years, amounting to 3.88trn/-.

The largest issued Treasury bond was on June last year which amounted to 630bn/- followed by April whereby the central bank issued bonds valued 596.2bn/-, while the smallest were recorded on October 2023 and January, when the central bank issued bonds amounted to 36.5bn/- and 32.2bn/- respectively.

According to BoT, the Treasury bonds have continued to account for the largest share of the domestic debt stock.

Data by the ministry of finance and BoT indicate that commercial banks account for 28.5 percent of all government domestic debts source, followed by pension funds with 28.1 percent and Bank of Tanzania with 21.6 percent.

Other government creditors according to the report are insurance funds with 5.8 percent share, BoT special fund, with 1.6 percent and others (unspecified creditors) with 14.5 percent share.