Tanzania's 5-year bond auction oversubscribed

Oct 08, 2014

Tanzania's latest bond auction was oversubscribed, attracting bids worth Sh71.6 billion (€33.8 million), although Sh62 billion was originally sought.

Tanzania's latest bond auction was
oversubscribed, attracting bids worth Sh71.6 billion (€33.8 million), although Sh62 billion was originally sought.

Attractive yields offered in the five-year government note were behind the performance, according to Tanzania Daily News.

Figures from the Bank of Tanzania (BoT) show that bond prices recorded a slight decline giving way for the yields to jump up. The average yield to maturity increased by 15.99 per cent, while the weighted average coupon yield rose to 11.9 per cent.

This contrasts with the results of the latest 12-month treasury bills auction in August this year, when a total of Sh135 billion (€60.7 million) was offered but bids only reached
Sh98.11 billion
.

A few weeks earlier, US rating agency Standard & Poor's (S&P) said that the financial costs associated with the issuance of eurobonds will now be greater for African countries.

“The heydays of bond offerings from newcomers or from frontier markets, like the African issuers we have seen over the last couple of years,
have ended. Periods of "oversubscribed bond offerings and very narrow, very tight spreads are over," said Konrad Reuss, Head of S&P’s sub-Saharan Africa unit.ADNFCR-2976-ID-801753168-ADNFCR