The Bank of Tanzania conducts weekly auctions of local currency sovereign debt securities (Treasury Bills and Treasury Bonds). The auctions are open to Tanzania and East African institutional and retail investors subject to a minimum value of TZS 1,000,000 or a multiple thereof per application.
ORBIT is a licensed dealer for both the primary and secondary sovereign debt securities markets. We advise prospective investors in the market, prepare bids, and manage their invested wealth.
Treasury Bonds and Treasury Bills
These are debt securities issued by the government to investors at a discount with a promise of periodic interest payments for bonds. These are considered the safest investments since the government is guaranteed to always pay her debts.
Treasury Bond; is a long term debt security, from two years maturity period, issued by the government to investors on a price discount with a promise to pay periodic interests and face value upon maturity of the bond. Bond maturities at the DSE are of 2yrs with 7.82%, 5yrs with 9.18%, 7yrs with 10.08%, 10yrs with 11.44% and 15yrs with 13.5%.
Treasury Bill; is a short term security, with less than a year to maturity, issued by the government to investors at a discount but without interest payments. Bills maturities period in Tanzania are of 35 days, 91 days, 182 days and 364 days.
How to invest in Government Debt Securities
One needs to open a BoT CSD account from any brokerage to invest in government securities. Three passport sizes, three copies of a valid reputable ID and three copies of one’s TIN Number will be required upon application. These government securities are first sold in the primary auction at the BoT and then listed at the DSE for secondary trading.
An investor will deposit funds with the broker after calculations of desirable bond prices and, and the broker will participate in the BoT auction to buy the bonds in the primary market, or on the DSE to buy the bonds in the secondary market. The minimum amount to invest in government securities is TZS 1,000,000 for T-Bonds and TZS 500,000 for T-Bills.
At the moment investment in Government securities is restricted to only local investors
Treasury Bills are short-term securities maturing within a year, used mostly for liquidity management. They are issued in the Primary Market on a fortnight basis.
Currently, the BOT issues T-bills in four maturities as follows:
- 35 days T-Bills
- 91 days T-Bills
- 182 days T-Bills
- 364 days T-Bills
For successful bids the settlement for making payment is T+0. On maturity, investors are paid face value [100%] of the respective T-bill. Income earned from T-bills is subject to the applicable withholding tax.
Treasury Bonds are long-term securities with maturities longer than a year. In the Primary Market, the Bank of Tanzania [BOT] issues T-bonds on monthly basis. Subsequently sales and purchases of T-bonds are conducted on a continuous basis in the Secondary Market, mostly at the Dar es Salaam Stock Exchange where they are listed.
Currently, the BOT issues T-bonds in five maturities as follows:
- 2 year T-bonds
- 5 year T-bonds
- 7 year T-bonds
- 10 year T-bonds
- 15 year T-bonds
- 20 year T-bonds
For successful bids the settlement for making payment is T+0. Interest payment on T-Bonds is paid Semi-annually. On maturity investors are paid the par value plus the last coupon interest.
- Advantages of Investing in Government Securities
- Key advantages of investing into Government Securities are as follows:
- Risk free instruments as they are issued by the Government;
- They are transferable and negotiable;
- They can be pledged as collateral security;
- Rate of return on Government Securities is competitive.