By Tanzania’s 11.25% 10-year Treasury bond drew TZS361.681 billion in competitive bids at an auction held on Sept. 2, more than twice the TZS146.320 billion offered by the Bank of Tanzania.
The central bank accepted the full amount on offer from competitive bids. The weighted average yield to maturity was 10.6924%, while the weighted average price was 103.3267, according to the auction result published by the Bank of Tanzania. The bond will be redeemed on July 23, 2036.
That demand was not evenly spread across the order book. The gap between the amount offered and the amount tendered shows that investors were willing to place substantially more money than the issuer needed to raise. The final allocation, however, was limited to the announced offer. That distinction matters: a heavily subscribed auction can signal interest without creating an immediate increase in government borrowing.
The result gives investors a fresh reference point for Tanzania’s long-term borrowing costs. The government has been issuing debt across the curve as it funds spending and refinances maturing obligations. Strong demand at the auction allowed the central bank to sell the planned competitive amount without increasing the issue size.
There were 109 competitive bids, of which 31 were successful. The highest bid price was 109.0000 per 100 of face value, while the lowest was 83.3963. The minimum successful price was 101.4576, showing that the accepted bids were concentrated above par even as investors offered a wide range of prices.
Non-competitive demand was weaker. Fifty-six non-competitive bids were received and all were successful, but the total tendered was TZS3.2828 billion against TZS36.580 billion offered. The bank accepted the TZS3.2828 billion tendered through that channel, taking total accepted bids to TZS149.6028 billion when the two categories are combined.
The bond carries an 11.25% coupon, but the average yield at the auction was lower because the average accepted price was above its face value. Investors therefore paid a premium for the fixed income stream, a calculation that matters more than the coupon alone when comparing the bond with other government securities.
The price data also gives dealers a way to compare the new issue with older bonds. A price above 100 means the security trades above face value, normally because its coupon is attractive relative to the return demanded by buyers. That premium can change quickly if expectations for inflation, liquidity or future interest rates move.
For local banks, pension funds and other institutional investors, the auction points to continued demand for longer-dated shilling assets. It also leaves the market watching whether secondary-market prices hold above par. A fall in price would push the yield higher, while a further rise would reduce the yield available to a new buyer.
Tanzania’s government securities calendar lists a new Treasury-bill auction for Sept. 9, followed by a five-year bond reopening on Sept. 16. Those sales will offer a nearer-term comparison with the long bond’s demand and yield, although Treasury bills and bonds attract different investors and carry different interest-rate risks.
