TMRC's Sh7 billion bond oversubscribed by 26.8 percent

The Sh7 billion bond issued by the Tanzania Mortgage Refinance Company (TMRC) Ltd was oversubscribed by 26.8 percent at the close of last week’s trade. The financial institution - which has as its sole purpose supporting mortgage lending in the country - offered Sh17 billion as part of a five-year corporate bond.

The offer, which was open to the public between April 8 and May 7, 2021, was the third segment of the Sh120 billion corporate bond programme which the TMRC is issuing in tranches over five years from 2018.

TMRC will use funds sourced from the capital markets for lending to primary mortgage lenders at competitive rates to boost mortgage ownership in Tanzania. The oversubscription was achieved after investors tendered Sh8.87 billion against the company’s offer for Sh7 billion, with a coupon rate of 10.48 percent.

TMRC statement issued by its chief executive officer, Mr Oscar Mgaya, yesterday said all the bids will be accepted - and they have already sent a request to the Capital Markets and Securities Authority (CMSA) to receive all the extra amounts.

“CMSA has approved all valid applications, and allocations will be made to all applicants by a hundred percent,” he said in the statement published in a newspaper.

Speaking to The Citizen, investment analysts underpinned the excellent performance on the high yield offered and the available liquidity in the market. “The company offered a 10.48 percent coupon payment which is higher than the nine percent paid by the Bank of Tanzania (BoT) for the assets of similar period, but also there is adequate liquidity in the market that is why long term securities usually record oversubscriptions” said the director of Arch Financial and Investment Advisory Limited, Mr Mazengo Kasilati.

The manager of advisory and capital markets at Vertex International Securities Ltd, Mr Ahmed Nganya, said the annual interest is one of the most attractive in the fixed instruments. “TMRC also has strong and engaging shareholders as its business is intertwined with investors’ business of mortgage lending,” he said. Mr Nganya added that the company also has the advantage of market leadership as it enjoys near monopoly in the mortgage refinancing market in Tanzania.

TMRC has had successful subscriptions in the first two tranches, whereby investors in the first tranche in June 2018 raised Sh12.52 billion against an offer of Sh12 billion - thus recording a four percent over subscription.

The second tranche, which TMRC wanted to raise Sh8 billion, was oversubscribed by over 16 percent as investors responded with Sh9.28 billion.