‘Strong T-bond demand signals economic stability’

DAR ES SALAAM: ANALYSTS say Tanzania’s 25-year Treasury bond oversubscription auctioned last week signals strong investor confidence in the country’s economic stability and fiscal discipline, reflecting a maturing bond market eager for long-term, reliable investment opportunities.

The strong demand for debt instrument last week reflects rising investor trust in the nation’s fiscal discipline and the development of a more robust, long-term bond market.

Vertex International Securities Manager, Research and Analyst Frank Abel said the high demand reflects strong confidence in Tanzania’s economic stability, with investors willing to commit longterm resources that support government development plans and strengthen financial resilience.

“The results reflect very positive investor sentiment. There is trust in the country’s ability to deliver stable returns over time and a clear preference for secure, long-term investments like government bonds,” he said.

Mr Abel said the central bank follows a planned borrowing strategy to maintain fiscal discipline. Despite high demand, adhering to this plan is crucial to keep debt levels sustainable and the market stable. He also emphasised the need for the government to direct public trust from government securities toward corporate bonds and funds managed by authorised fund managers.

Achieving this shift would ensure sufficient capital in the markets, enabling stable businesses to access funding for growth.

This trend indicates that Tanzania’s bond market is becoming stronger and deeper, with the capacity to attract significant investments in long-term instruments a positive sign for the future of the country’s financial markets.

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On his part, the Advisory and Research Manager at Zan Securities Mr Isaac Lubeja said the level of demand shows deepening investor confidence in the Tanzanian economy and the stability of its macroeconomic environment.

For the government, it offers the opportunity to secure long-term funding at attractive rates, even after dropping the 25 year coupon from 15.75 per cent to 15 per cent the market is still ready to lend to the government to support infrastructure and development projects without putting excessive pressure on short-term borrowing costs.

It also strengthens the country’s yield curve, providing a reliable benchmark for private sector debt issuance.

“The oversubscription points to strong optimism in the bond market, with investors clearly favouring long-dated instruments such as the 20-year and 25-year bonds. “These securities offer higher coupon rates and better liquidity in the secondary market, which is appealing to institutional investors and retail investors,” he stated.

Data from the first half of 2025 shows that secondary market bond trades have exceeded 2.7tri/-, with over 60 per cent of that volume concentrated in long-dated maturities.

More over in the primary market investor appetite has continued to reach new record this year; on 3rd April, a 20- year bond auction attracted 760bn/- in bids, while on 7th May, a 25-year bond drew 794bn/-.

The consistent high demand indicates that investors are confident in the long-term stability of interest rates and inflation, viewing government long bonds as both a safe haven and a steady income source.

Despite the strong demand, the Bank of Tanzania (BoT) maintained the planned offer size of 264.31bn/- in line with its fiscal funding strategy and liquidity management objectives.

This is particularly relevant following the recent Monetary Policy Committee (MPC) decision to reduce the Central Bank Rate from 6.00 per cent to 5.75 per cent aimed at stimulating economic activity.

By keeping issuance disciplined, the BoT ensures that lower policy rates do not trigger excessive liquidity growth that could lead to inflationary pressures. It also sends a signal of predictability and fiscal discipline, which in the long term supports market stability, even if some investors may feel, crowded out in individual auctions.

The strong performance of the 25-year bond shows the growing sophistication and depth of Tanzania’s bond market. Investors are increasingly willing to commit capital over longer horizons, reflecting confidence in macroeconomic stability and the government’s debt management framework.

Transparent auction processes, a consistent issuance calendar, and active secondary market trading have all contributed to this maturity.

The fact that demand for long-dated securities continues to break records suggests that Tanzania’s debt market is well-positioned to support both public financing needs and private investment opportunities for years to come.