DSE to trade long-term bonds

DSE to trade long-term bonds

The Permanent Secretary in the Ministry of Finance and Economic Affairs, Mr Ramadhani Khijjah, said the issuances of the long tenure treasury bonds was of paramount importance as dependence on donors' sources has some limitations.

"I cannot tell off hand exactly when, but the bonds will be issued soon. Financial and capital markets experts are working on the issue so as to advise us (the government) soundly," Mr Khijjah said.

The PS said on Thursday after opening a one-day financial deepening seminar that was organised by jointly by Dar es Salaam Stock Exchange (DSE), Capital Market and Securities Authority (CMSA), the World Bank investing Arm IFC and NIC Capital a sister company of NIC Bank.

He said once experts finalised their propositions on how to go about, the issuance would follow without delay. Capital markets experts are currently working on coupon and yield rates to be offered for such long term tenures which are taking into consideration key macroeconomic fundamentals such as inflation and exchange rates.

"Given the importance of the capital markets in the economy, the government will continue to support development of capital markets - as a matter of policy to look into more incentives to encourage the existence of vibrant market," Mr Khijjah said. IFC Country Manager for Tanzania Mr Dan Kasirye, said financing Africa's development, including Tanzania requires long term investments - especially in sectors such as road, industry, housing and microfinance.

"Local bonds markets can be important sources of this funding as they mobilize funds from domestic and international investors," the country manager said. The DSE Chief Executive Officer, Mr Gabriel Kitua, said the bourse has come of age and could now facilitate listing of all sizes of companies, corporate bonds of any class, sovereign and sub sovereign bonds.

"..It is time companies, government, municipal authorities and investors turn into growth opportunities through capital markets," Mr Kitua said. Tanzania Securities Chief Executive Officer Moremi Marwa said the market is ready for up to 30 years bonds as the current situation portrays the picture, where almost all 10 years bonds have been oversubscribed in the past.

Zan Securities CEO Raphael Masumbuko also seconded his fellow stockbrokers adding "after all there is a good mechanism for investment if one wants to sell his (or her) bond-through DSE."  On the other hand, NIC Capital Managing Director Irungu Nyakera said local bond markets are a form of incredible backbone to financial markets all over the world without them there would be not liquid cash from companies and economy to grow.

The workshop was supported by the Efficient Securities Markets Institutional Development (ESMID) Africa, a joint programme by IFC, WB and Swedish International Development Cooperation Agency (SIDA).

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