.jpeg)
The Bank of Tanzania, acting as the fiscal agent of the Government of Tanzania, has introduced an important change to improve the transparency of Treasury Bond auctions.
Currently, investors bidding for Treasury Bonds only state the face value and price per 100 shillings in their bids.
However, this process is not very clear, especially for bond re-openings, as the bids do not show the details of the bond's price components, such as the clean price (the price without interest) and accrued interest (the interest that has built up since the last payment).
This lack of clarity has made it difficult for investors and the public to fully understand how the final price of the bond is determined.
To address this issue, starting from April 2, 2025, the Bank of Tanzania will require investors to include three key price details in their bids: the clean price, the accrued interest, and the total settlement price (called the dirty price, which includes both the clean price and the accrued interest).
The accrued interest for each bond will be published in advance, a week before the auction, in the Call for Tender.
This will help investors understand the total cost of purchasing the bond. While investors will have to include all three price details in their bids, the final auction results will still be based on the clean price.
This change aims to make the bidding process clearer, fairer, and more transparent, so that investors can make better decisions when buying government bonds.
The Bank of Tanzania is making sure that investors have the information they need in advance, which will improve competition and help determine fair bond prices.
The updated bid application form will be available on the Bank of Tanzania’s website, where investors can download it and fill it out.
If investors have any questions, they can contact their Central Depository Participants (CDPs) or reach out directly to the Bank of Tanzania for more information.
This improvement is a big step forward in making Tanzania’s bond market more transparent and competitive.
By making the pricing process clearer, the Bank of Tanzania hopes to attract more investors, both locally and internationally, which will help the country’s economy grow and remain stable.
These changes will help ensure that bond auctions are fair and that investors have all the information they need to make informed decisions.
As these new rules take effect in April 2025, Tanzania’s bond market will become more transparent and aligned with global best practices.