The first ever exchange traded retail bonds (ETRBs) in East Africa were listed on Friday last week. The event was graced by the Deputy Minister of Finance and Planning, Dr Ashatu Kijaji, who commended Exim Bank for the development.
She said the government welcomed the listing and urged other private investors to follow Exim Bank’s example and invest in retail bonds.
"This retail bond is expected to facilitate the development of a vibrant retail bond market in Tanzania and open doors for other private sector companies, government entities and municipal bodies to explore innovative methods for meeting their financing requirements,” she said
Speaking at the ceremony, Selemani Ponda, Chief Financial Officer , Exim Bank Tanzania said: “The six year retail bond was not only a major development in Tanzania financial sector but also in East Africa, as Exim Bank becomes the first bank in East Africa to issue ETRBs.”
The bond carries a coupon rate of 15.56 per annum for a period of six years. The bond issue received overwhelming response by retail investors and was oversubscribed by 95 per cent.
Exim Bank raised 19.95bn/- out of which around 14.97bn/- was retained and the balance refunded back to the investors. The bond will strengthen the capital base of the bank and will be used for on-lending purpose.
The Capital Market and Securities Authority (CMSA) director, Nicodemus Makama, said the Exim Bank retail bond listing on the DSE is historical, as it is the first exchange traded retail bond in the East African Community (EAC) and Southern Africa Development Corporation (SADC) blocs.
It is expected to facilitate the development of a vibrant retail corporate bond market in these regions, he said. According to him, exchange traded retail bonds provide opportunities to small investors to invest in bonds in lower denomination, diversify their investments and trade in the bonds market thus providing needed liquidity and periodic cash flows.
On his part, the DSE Chief Executive Officer Moremi Marwa, said the listing of the Exim retail bond brought to 15, the total number of corporate bonds that have been issued by 10 corporations and listed on the DSE. Out of these 15, four are corporate bonds that are still outstanding and worth about 57bn/-.
Tanzania’s total bonds market size is currently worth 4.56trn/-, equivalent to six per cent of the GDP, out of which 99 per cent is made up government bonds while one per cent corporate bonds. It has a trading turnover averaging 350bn/- per annum with a liquidity level of seven per cent.
“These statistics clearly indicate that our bonds market is in the lower end relative to other markets, even by sub-Sahara Africa (SSA) standards,” said Mr. Marwa.