Dar es Salaam, 29 September 2025 – The Bank of Tanzania (BoT) is adjusting its debt strategy by focusing more on longer-term government securities after last week’s 25-year Treasury bond attracted far more bids than expected.
In the auction, investors tendered bids totaling TSh 980 billion, while only TSh 264.3 billion was on offer—leaving the auction oversubscribed by over TSh 700 billion.
BoT’s Strategy Shift
BoT plans to reopen the 10-year Treasury bond this Wednesday instead of the originally scheduled 2-year bond. Analysts say this reflects the central bank’s efforts to extend the maturity profile of government debt while meeting investor demand.
- The 25-year bond issued last week carried a 13.75% coupon, down from 15% for the same tenor six weeks ago.
- Despite the lower rate, investor demand remained strong.
- The weighted average yield settled at 13.19%, a drop of around 60 basis points from the previous auction.
What Analysts Say
Geofrey Kamugisha, Head of Business Development and Customer Service at Alpha Capital, commented:
“Despite the aggressive rate cut, investor interest was overwhelming. It shows that investors are keen to lock in longer-term positions, possibly expecting interest rates to continue falling.”
Isaac Lubeja of Zan Securities added that long-term institutional investors, such as pension funds, will continue to participate, while some others may shift to shorter-duration bonds that offer attractive returns.
Ahmed Nganya of Vertex International Securities said the coupon cut from 15.75% to 13.75% helps align bond prices to reasonable levels in the secondary market.
Market Trends
- Fixed-income markets are seeing strong demand and oversubscription.
- Yields are declining as BoT continues monetary easing.
- Longer-dated securities are attracting institutional investors, while shorter-term instruments appeal to those balancing risk and return.
Conclusion
BoT’s move toward longer-term bonds reflects a strategy to improve debt sustainability and investor confidence. For investors, it presents an opportunity to lock in returns before yields fall further.
Source: Daily News
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