4 July 2014

Tanzania: Treasury Bond Set to Benefit Investors

THE performance of long term debt instruments has remained impressive due to the financial sector deepening towards economic expansion, the Bank of Tanzania (BoT) has said.

The BoT Senior Financial Analyst Mr Mohamed Kailwa, said in an interview at the ongoing 38th Dar es Salaam International Trade Fair (DITF) taking place in Dar es Salaam that, "almost all the government securities have in recent days been greeted by oversubscription, a sign of the vibrant market."

Last year, the bank introduced the 15 year Treasury bond to the market and was greeted with excitement. He added that it had been a dream of the bank for many years to sell the long term note exceeding 10 years.

The bond issuance was pushed by the introduction of a long term financial market instruments such as mortgage financing products, syndicated loans and corporate bonds.

"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," he said, adding that Kenya has for long been issuing the 30-year debt security, which is a necessary instrument for financing long term investments like infrastructure and industrial development.

The highest maturity paper that the central bank has been issuing was a 10 year note, followed by seven-year, five-year and two-year treasury bonds.

The new government note marks a new investment opportunity to investors in long-term maturities. The issuance of the long term debt instrument offers an important milestone for the study of the market behaviour before deciding to issue other long term bonds of 20 to 30 years.

"It is upon the bond market development committee under the Treasury and BoT to decide for the new debt instruments," he said.

According to Mr Kailwa, the key players in the long term government securities have been the pension funds, insurance companies and a few microfinance institutions.

But in the recent days, commercial banks that formerly concentrated in short term notes were currently going for the long term debt instruments to explore the investment opportunities.

Copyright © 2014 Tanzania Daily News. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.