Govt eyes 183bn/- through 20yrs bond
DAR ES SALAAM: THE Bank of Tanzania (BoT) will on Wednesday this week auction 20 years Treasury bond seeking to raise 183bn/- at a 15.49 per cent coupon rate.
Robust demand has been charactering the reissuance of bonds with tenures of 20 and 25 years testifying the confidence that retail investors place in these securities.
The last issue of 20 years Treasury bond auctioned in the previous month fetched 503.7bn/- as total amount tendered which is over three times oversubscription against the amount of 137bn/- sought to be raised.
The weighted average coupon yield was 14.85 per cent while the weighted average yield-to-maturity was 15.12 per cent.
Despite the oversubscription, the government retained 209.99bn/- as successful amount.
In 2022, the government opened the capital markets to investors from the East African Community (EAC) and the Southern African Development Community (SADC) as way to broaden investor base and foster sustainable economic development.
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The Bank of Tanzania (BoT) Foreign Exchange Regulations, 2022 among others permit residents of the East African Community (EAC) and Southern African Development Community (SADC)…to invest in the treasury bills and treasury bonds.
The regulations also permit a person resident in Tanzania to invest in the prescribed territory.
Commenting on the government move, Mr Beatus Mlingi, Research and Analytics Manager at Vertex International Securities Limited said the implementation of these measures will make Tanzania regional hub for capital market activities, attracting a diverse range of investors and fostering sustainable economic growth.
“The increased participation from regional investors can also lead to greater diversification of the investor profile, reducing the reliance on domestic investors and mitigating market risks,” he said.
Furthermore, he said the government decision to bolster domestic capital market as a critical source of financing will play essential role in driving economic growth and development.
“The domestic capital market serves as a vital conduit for channeling savings into productive investments, thereby supporting infrastructure development, corporate expansion, and job creation,” he said.
The Finance Minister Dr Mwigulu Nchemba said when tabling the 2024/25 budget in Dodoma last month in order to ensure that domestic capital market remains as a key source of financing, the government will continue issuing benchmark bonds to create competitive reference rates within the domestic capital market as well as broadening the market’s accessibility to regional investors from EAC and SADC.
