02300cas a2200253 a 4500 AALejournalIMF004990 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451869422 1018-5941 BD-DhAAL BD-DhAAL Sobolev, Yuri. High and Volatile Treasury Yields in Tanzania : The Role of Strategic Bidding and Auction Microstructure / Yuri Sobolev, S. M. Ali Abbas. Washington, D.C. : International Monetary Fund, 2008. 1 online resource (29 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students The observed increase in the level and volatility of Tanzania's Treasury yields in recent years against an otherwise benign macroeconomic backdrop presented a puzzle for policymakers, while raising concerns about the fiscal burden of rising debt interest payments and diversion of bank credit away from the private sector. Using evidence from bid-level data and supported by theoretical models, this paper argues that oligopolistic bidding through 2005 may have been partly responsible for the rising level of yields; while the high volatility during 2006-07 could be traced to the emergence of a sharp segmentation of the T-bill market between sophisticated financial market players (foreign-controlled banks) and a lessexperienced group of investors (domestic pension funds and small banks). An important policy recommendation that emerges is that public debt managers should avoid micromanaging Treasury bill auctions by issuing amounts in excess of those offered or by dipping into oversubscribed segments of the yield curve, as such practices seriously disadvantage the less-sophisticated (but more competitive) investors vis-a-vis the more sophisticated players. Mode of access: Internet Abbas, S. M. Ali. IMF Working Papers; Working Paper ; No. 2008/081 Full text available on IMF http://elibrary.imf.org/view/journals/001/2008/081/001.2008.issue-081-en.xml IMF e-Library