Tanzania to sell first Treasury bond in two regional blocs

Tanzania has opened the bond market to the East African Community (EAC)  and Southern African Development Community (SADC) as it seeks to tap a wider territory for its bond sale at a time when international bond markets have become very expensive.

The neighbouring country’s  Treasury is seeking Sh.6.6 billion (TSh130 billion) from the sale of a five-year fixed rate bond to its citizens and those from East and Southern African trade blocs.

“Residents of the EAC and SADC and Tanzania citizens can now participate in the primary auction and subsequently secondary trading of securities issued by the government of the Republic of Tanzania,” the country’s Central bank, Bank of Tanzania said.

Economic times

Analysts say that this could be due to the difficult economic times around the world where interest rates are rising to make it hard for developing economies to raise funds.

“Opening up the market to the region should help Tanzania borrow at more affordable rates than going to the Eurobond market where rates are very high at the moment,” said Wesley Manambo of Genghis Capital.

The move by Tanzania could be a trendsetter as it comes at a time when the African Union is pushing for the implementation of a continental debt rating agency to help lower the cost of borrowing on the continent as policymakers cry foul over unfair debt rating agencies.

Kenya has been struggling to tap debt markets and has resorted to reopening past bond issues to access affordable funding having been held back from the Eurobond by expensive rates. 

The bond on auction on August 10 is the first to be opened to the EAC and SADC blocs, of which Tanzania is a member. “BoT wishes to notify the general public that new Foreign Exchange Regulations, 2022 have been issued under the Foreign Exchange Act, Cap. 271, through Government Notice No. 294 of 2022, published in the Government Gazette on May 13 2022,” the banking regulator said.

The five-year paper will be auctioned by the Bank of Tanzania (BoT) at a coupon rate of 8.6 per cent. In a June notice, the central bank said the government had gazetted a new law removing restrictions on the sale of its securities to foreign investors.