Dar Stock Exchange Investor Interest Shifts To T Bonds On Covid-19 Economic Shocks


Government guaranteed treasury bills are increasingly the preferred asset in Tanzania’s main stock market in the wake of the coronavirus pandemic, as more investors move away from stocks for option the most risk-free.

Treasury bills traded on the Dar es Salaam Stock Exchange (DSE) were worth more than four times the total shares traded in over-the-counter transactions involving listed entities in mid-2021 , with the Bank of Tanzania (BoT) attributing this to an increase in perceived risks on stocks due to the global and domestic economic downturn caused by Covid-19.

The value of treasury bills traded by the BoT on behalf of the government on the stock exchange rose 26.6% to just over $ 962.3 million year-on-year between June 2020 and June 2021, while the figure Total stock market shares traded business fell 22.6% from $ 292 million. to $ 225.87 million over the same period. Treasury bills traded in 2019/20 stood at $ 762,895.

“The increase was mainly attributed to the change in investor appetite for risk-free investments due to the impact of the Covid-19 pandemic and the continued efforts of stakeholders to develop the bond market,” said the BoT in its annual report for 2020/2021. published on December 31.

The 20-year government bond was the most traded, accounting for 42.7% of total transactions, followed by the 10-year bond (22.6%), the 15-year bond (21.6%). %), the seven-year bond (9.5%), and the five-year bond. – bond year (3.1 percent).

The central bank’s two-year bond and 25-year bond contributed 0.6% of total transactions amid growing speculation that the 25-year bond, which was introduced in April of l ‘last year with higher returns to complement government efforts, will gain popularity through this year.


Trade in corporate bonds more than tripled in value, from $ 246,597 in 2019/2020 to $ 741,222 in 2020/2021 thanks to the strong appetite of retail investors for bonds issued by banks NMB and Exim ( Tanzania).

In May 2020, as part of the mitigation of the impact of Covid-19, the BoT reduced the haircuts on government securities, from 40 to 20% for Treasury bills and from 10 to 5% for bonds of the Treasury, in order to strengthen the capacity of commercial banks to borrow from the central bank with less collateral and subsequently to reduce the interest rates on loans to individual borrowers.

A haircut is the value below the market value placed on an asset when it is used as collateral for a loan.

But financial sector observers say banks have used the extra cash to buy more government securities rather than issuing more loans to individuals and private companies.

Increase credit

Charles Kimei, the Vunjo lawmaker who previously headed CRDB Bank, pointed out to parliament last year that while banks may be right to do so as a precaution against various market risks induced by the pandemic, it compromises attempts by the central bank to extend credit and ease lending conditions to the private sector.

The BoT said in its report that treasury bills and bonds worth $ 2.12 million were issued in 2020/2021 to fund government budget operations, which were characterized by revenue revenues. lower than forecast, thus widening the budget deficit.

Of the amount borrowed, $ 1.3 million was for rolling maturing bonds and $ 819,245 for budget funding.

Bonds and bills were oversubscribed, attracting offers worth more than $ 2.08 billion.

“In line with strong demand in the money market, overall Treasury bill yields declined on average 4.75% from 5.85% in 2019/2020,” the BoT said.

At least 64.5% were in the form of treasury bills of which $ 1.41 billion was accepted in the total value of the offers.

The central bank accepted offers totaling $ 797,572, while treasury bills worth $ 1.04 million matured in 2021, down from tsh 3.45 billion (1 , $ 49 million) the previous year.

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