Oversubscription greets 25 years T-bond

DAR ES SALAAM: THE 25 years Treasury bond auctioned by the Bank of Tanzania (BoT) on Wednesday more than doubled, signalling strong investors demand for the long-term debt instruments.

The oversubscription underscores investor confidence in the government’s fiscal policies and the appeal of secure, long-term investment options amid a stable economic outlook.

The high demand for the bond, which carries a competitive interest rate, reflects the growing appetite for government securities as investors seek steady returns over extended periods.

The BoT auction results show that the 25 years bond attracted bids worth 449.07bn/- compared to 206.17bn/- which the government sought to raise.

Despite the oversubscription, the government retained 335.08bn/- as successful amount. The 15.24 per cent coupon rate was offered in the 25-year instrument held on Wednesday higher than 15.03 per cent of the edition held last month.

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The weighted average yield to maturity declined slightly to 15.41 per cent slightly higher than 15.38 per cent of the previous session that took place in June.

The central bank continues to see strong investor interest in its long-term debt instruments, as evidenced by the oversubscription of the 25-year Treasury bond auctioned on Wednesday.

This reflects the sustained confidence retail investors place in bonds with tenures of 20 and 25 years, driven by their stability and attractive returns. Reissuances of these long-term bonds have consistently been met with high demand, highlighting the appeal of secure, low-risk investments.

Investors see these bonds as a reliable way to grow their portfolios while supporting government initiatives aimed at stimulating economic growth. The government uses funds raised from these debt instruments to finance largescale infrastructure projects critical to the country’s development.

These projects include the construction of essential infrastructure such as roads, railways, bridges, ports, airports, hospitals and schools, all of which are vital to modernising the economy. Investments in these long-term initiatives have a ripple effect, boosting business growth, improving living standards and increasing government revenue.

By enhancing the country’s infrastructure, the projects help reduce transportation costs, facilitate trade and promote access to healthcare and education.

Additionally, the execution of these infrastructure projects creates jobs, stimulating demand for goods and services in various sectors of the economy.

This further solidifies the government’s strategy of using long-term bonds to fund critical national development efforts. In the long run, the projects funded by these bonds will contribute to sustained economic growth, making Tanzania more competitive in the regional and global markets.

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The high demand for the bonds reflects the alignment of investor interests with the government’s vision for economic transformation.

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.

The 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.