The medium term note instrument allows the Dar es Salaam based bank which is the largest in the country by branch network, profit and customer numbers, to issue to between 20-25bn/- subordinated bond to mature within the next three years.
NMB will pay 13 percent annual interest rate in twice-yearly instalments to investors who are prepared to lend it their money until 2018. In the next six months, the bank will pay 6.5 percent interest rate.
NMB’s Investor Relations Manager, Anna Mwasha said the debt issue, by way of a subordinated medium term note, will be issued next Tuesday through Dar es Salaam Stock Exchange.
“The approval by Capital Markets and Securities Authority allows us to enter the next phase of the transaction. We expect to be in the market with the first tranche next week,” Mwasha said yesterday during a reporters’ briefing.
The lowest amount to be purchased will be 500,000 /- which will allow the majority of small investors participate fully in investment.
NMB needs extra cash to strengthen its capital base and support planned expansion in lending to the retail and business segments.
According to her, the bond provides the bank an opportunity to tap the favourable conditions prevailing in the debt market to raise additional capital as it gears to strengthen its presence in the region.
Investor appetite for debt securities has been positive going by the success of recent bond issued, Mwasha noted.
Investors will apply for the bond, which will be available in all 176 NMB branches countrywide and through DSE licensed dealers and buying will end on 8 June, 2016.
The bond which market analysts described as highly paying, will enable investors to earn up to 130,000/- per annum for a 500,000/- investment.
“The interest will be paid twice per annum in instalments of 65,000/-,” said Senior Manager, corporate Affairs Public Relations, Joseline Kamuhanda.
Kamuhanda said the bond is more akin to an investment in the company’s shares with maximum returns by end 2018.
“Investors will be able to sell their bond holdings in the meantime, but the value will fluctuate according to market forces,” she said.