UEMOA-Titres urges insurers to invest in government securities in the WAEMU

Feb 11, 2016

In the WAEMU zone, interest rates on fixed income remain high.

UEMOA-Titres, an agency created to support States with the issuance and management of public debt securities within the WAEMU, called on insurance companies to seize opportunities on the regional bond market.

It regretted that in the union, insurance companies invest to a lesser extent on the government securities market for their long-term assets.

"Although real estate investments represent a long-term opportunity, they remain relatively illiquid. Government securities provide insurance companies with the possibility to diversify across a range of securities from different issuers and with different maturities," it said in a statement published by Ecofin Agency.

"The government securities in the WAEMU present investment opportunities for regional and international institutional investors such as insurance companies thanks to their returns, the tax treatment of these instruments but also thanks to their historically low risk profile," added the institution.

It believes that unlike other investments, debt securities allow investors to be credited with a fixed payment stream and over a set period.

"For an investor who tends to adopt a purchase/retention strategy, notes and bonds represent an excellent opportunity because they provide cash flow known in advance and guaranteed," it explained.

In the WAEMU zone, interest rates on fixed income remain high. Over the year 2015, three-month Treasury bills showed an average rate of 4.12 per cent per issuance.

Recent bonds, with a maturity of seven to 10 years, showed a yield of 6.48 per cent, which is "even more interesting for investors in long-term profile for insurers," the agency said.ADNFCR-2976-ID-801812354-ADNFCR