Azania unleashes 30bn/- bond for strategic projects

DODOMA: AZANIA Bank has unveiled a four-year bond worth 30bn/-, aimed at facilitating the implementation of strategic projects across key economic sectors nationwide.

The bond, named ‘Bondi Yangu’, requires a minimum investment of 500,000/- and can be purchased at Azania Bank branches, through authorised agents of the Dar es Salaam Stock Exchange (DSE), or via the bank’s website.

The Minister for Finance, Dr Mwigulu Nchemba, commended Azania Bank for its notable progress, stating: “I applaud Azania Bank for this exemplary initiative.

You have shown commitment to fostering national development and supporting the government’s strategic projects through the sale of these ‘Bondi Yangu’ securities.

This aligns with President Samia Suluhu Hassan’s vision for advancing Tanzanian development.” Dr Nchemba added, “The government’s role is to maintain an enabling business environment so that more productive innovations, such as this, can emerge.”

He highlighted that the investment amount is accessible, even for Tanzanians with modest incomes, noting the 12.5 per cent annual interest rate, with profits distributed quarterly, as a testament to Azania’s dedication to empowering the public.

Ms Esther Mang’enya, the Managing Director of Azania Bank, explained that this is the bank’s first public bond issuance, aimed at enhancing its funding capacity to support various strategic initiatives in line with the sixth-phase government’s goals to enhance social services and stimulate economic growth.

The bond offer commenced yesterday and will remain open for eight weeks, concluding on 6 December this year.

Upon closure, ‘Bondi Yangu’ will be listed and available for trading on the DSE, enabling bondholders to sell their investment on the secondary market through authorised brokers and access the principal before maturity.

“Our goal is to raise 30bn/-, but the CMSA has given us the flexibility to extend this by an additional 15bn/-, potentially allowing us to raise up to 45bn/-,” Ms Mang’enya said. Mr Alfred Mkombo, representing the CMSA, praised Azania for this crucial milestone.

“As the CMSA, we are responsible for ensuring that all bond issuances comply with regulatory standards. We have approved Azania’s ‘Bondi Yangu’,” he said.

Fortius Rutabingwa, Executive Director of Research, Innovation & Projects at Orbit Securities, noted that corporate bonds typically yield higher returns than government bonds due to associated risks.

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He observed that Azania’s bond offers a 12.50 per cent yield, approximately 9 basis points above a comparable five year government bond yielding 12.41 per cent, though the latter figure reflects a bond nearing two years to maturity.

He pointed out that Azania’s bond includes enhanced features, such as more frequent quarterly coupon payments instead of the semi-annual structure of government bonds, appealing to investors seeking regular cash flow.

Additionally, the lower entry threshold of 500,000/- may attract retail investors, contrasting with the 1,000,000/- minimum for treasury bonds.

“The level of subscription will rely on investors’ risk assessments and market liquidity, particularly amid the current surge of capital market products as we approach the holiday period,” Mr Rutabingwa added.

Head of Research and Financial Analytics at Alpha Capital, Imani Muhingo, remarked that the Azania bond exemplifies how capital markets can support financing, as demonstrated by banks leveraging bond issuances to meet increasing credit demands.

He cited the recent strong domestic investor interest and market liquidity—evidenced by the 25bn/- equity turnover, 32.4bn/- bond turnover and 185.46bn/- in bids for the 25-year Treasury bond in late October—as positive indicators for Azania’s ability to achieve its funding goal.

Raphael Masumbuko, CEO of Zan Securities Limited, mentioned that the central bank’s hesitance to price long-term securities at a discount is likely to shift market attention towards medium-term instruments for better yields.

He suggested that with 20-year bonds priced at par, the yield curve might develop a humped shape, with medium-term yields surpassing those of both shorter and longer maturities.