Yields Still Attractive, Despite Swift Recent Compression

May 2007 | Market Strategy

With inflation continuing to come down, we continue to see value in high yielding Tanzanian local debt, particularly in the two year portion of the curve. We caution though that we have seen significant yield compression in recent months, and the rate of further compression is likely to slow going forward. We expect to see the yield curve flattening over the coming months, with shorter-dated bills showing greater stability going forward on account of an aggressive recent sterilisation campaign. Liquidity constraints prevent exposure to the longer-end of the curve. Currency risk is however a slight concern, with the shilling a

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