Tanzania's latest bond does not woo investors

Nov 03, 2016

Experts blamed tight liquidity for the poor performance.

Tanzania's latest treasury bond was undersubscribed, showing investors' low appetite for the country's debt, amid an ongoing liquidity crisis.

The government initially planned to raise Sh138.5 billion (€57.4 million) but only Sh69.7 billion was tendered.

Proceeds from the bond would be used to finance infrastructure projects and settle some maturing debts.

This contrasts with the bond auctions issued in 2014, which were oversubscribed.

US rating agency Standard & Poor's (S&P) recently warned 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-801827819-ADNFCR