THE Bank of Tanzania (BoT) will from next month start issuing 15-year Treasury bonds at 13.5 per cent coupon rate, the first time for the history of the country's financial markets to have money instruments exceeding 10 years.
The highest maturity paper that the central bank has been issuing is 10 year note, followed by seven-year, five-year and two-year treasury bonds. The new note marks a new investment opportunity for investors in long-term maturities.
BoT Director of Economic Research and Policy Joseph Massawe told the 'Daily News' in Dar es Salaam yesterday that it had been a dream of the bank for many years to sell the long term note exceeding 10 years.
"It is a significant milestone to have the 15-year bond in the market that offers opportunity for investors to invest and for the government to raise money for long infrastructure development," said Dr Massawe, citing Kenya that has for long been issuing the 30-year note, a necessary instrument for financing long term investments like infrastructure and industrial development.
BoT Financial Markets Director Judith Ndissi said through a thorough survey that the bank had conducted, it was found that there is high demand for the longterm instruments.
"This is the beginning and we will be studying the market behaviour before deciding to issue other long term bonds of 20 to 30 years," she said. Pension funds, insurance companies and a few microfinance institutions are some of the investors in the long term government papers.
The government use debt instruments to borrow money from the public for both short and long term investment purposes.