Why after over-subscription Twiga bond trades on the DSE
THE National Bank of Commerce (NBC) has achieved another milestone by listing its first-ever NBC Twiga Bond on the Dar es Salaam Stock Exchange (DSE).
Twiga Bond, a Medium Term Note of 300bn/- was opened in the primary market on 31st October 2022, with the first tranche of 30bn/- was oversubscribed by 30 percent to the tune of 38.9bn/- against a target of 30bn/-. This in a nutshell represents a subscription record of a whopping 130 per cent.
NBC Twiga Bond’s offer, which opened on 7th November 2022 and closed on 6 December 2022, is the first by the bank in the net proceeds to lend to retail, small and medium-sized businesses, agricultural value chain businesses, whose products and services directly impact on women and youth and local and multinational corporations.
Gracing the event at the DSE offices in Dar es Salaam yesterday, the Commissioner responsible for Sovereign Debt Management at the Ministry of Finance and Planning, Mr. Japhet Justine, while representing the Permanent Secretary in the Ministry of Finance and Planning, Mr. Emmanuel Tutuba, applauded the bank for the move, saying it will open up the stock market and empower the business community.
‘The government applauds the innovation of bringing Twiga Bond to the market to raise funds to support the SME and the agricultural value chain. Apart from supporting the financial inclusion drive, we are happy to learn that the trickle-down effects will reach further down the supply chain by financing the SMEs, MSMEs, and the agriculture value chain at large. Let me assure you of maximum government support,” he said.
On his part, NBC Bank Managing Director, Theobald Sabi, who was represented by the bank’s Director for Treasury, Peter Nalitolera, said: “As one of the largest lenders in Tanzania, we are thrilled to announce the success of the 1st tranche of Twiga bond issued early last month where we oversubscribed by 30 per cent, raising a total of 38.9bn/- from the target of 30bn/-. The oversubscription shows the trust that the market has in the NBC Bank brand, and we are equally grateful for their trust and support,” he said.
Elaborating, he noted that listing Twiga Bond on the Stock Market will open more doors for further trading of the Bonds, adding: “Today, we are happy to list Twiga Bond in the DSE to allow further trading by the public. Now investors who bought the bonds during the primary market can easily trade, while those who did not manage prior can now buy via the stock market brokers,” he said
‘We had 639 applications, out of which 97 per cent were individual retailers, and the rest were institutions. This is a good sign of improved efforts in financial literacy in our country, where now most Tanzanians understand the importance of investing in bonds and financial securities. Our records show that women accounted for 42 per cent of all retail investors (241). This is a big leap in our efforts for financial inclusion. The oversubscription demonstrates the trust the market has over the NBC Bank brand and what it stands for,” he said.
Mr Sabi further said investors in the NBC Twiga Bond would earn an interest rate of 10 percent per annum, payable quarterly throughout the five years investment tenure.
Giving her remarks during the occasion, the DSE Chief Executive Officer, Ms Mary Mniwasa congratulated NBC bank for the important step while noting that the bank’s participation in the market makes DSE close this year with the listing of two corporate bonds.
“The two bonds listed within this year make the number of corporate bonds that have been listed on DSE reach five with a total value of 186.67bn/-. The figure may seem small, but it reflects the great efforts that are being made,” she said.
Speaking during the same occasion, the Capital Markets and Securities Authority (CMSA) Chief Executive Officer, Mr. Nicodemus Mkama, in addition to congratulating NBC bank for the success, he also congratulated the government for creating an enabling environment that attracted more investors to the bond.
“The achievement has largely been backed by the enabling environment of the government, especially its move to remove the withholding tax on corporate bonds, a move that has attracted more investors to the kind of bond, ” he said.
