CRDB Bank’s infrastructure bond generates Sh323 billion

CRDB Bank’s infrastructure bond generates Sh323 billion

Dar es Salaam. The oversubscription of CRDB Bank’s Samia Infrastructure Bond, which raised Sh323 billion, has drawn mixed reaction over investor appetite and trust in Tanzania’s capital markets.

The bond targeted to raise Sh150 billion but investors oversubscribed it by 115 percent, according to a statement issued by the bank yesterday.

Named Samia Infrastructure Bond, the bond is a financial initiative designed to enhance rural infrastructure projects managed by the Tanzania Rural and Urban Roads Agency (Tarura).

The money raised through the bond by CRDB Bank PLC, will go towards financing contractors executing projects under Tarura’s upcoming tenders.

The Minister of State, President’s Office for Regional Administration and Local Government (RALG), Mr Mohamed Mchengerwa, emphasised that the bond’s success marks a significant step in addressing Tanzania’s infrastructure challenges.

“The Sh323 billion raised will accelerate road construction and other critical projects, directly improving the lives of citizens. It also demonstrates the strength of Tanzania’s financial system in supporting large-scale national development initiatives,” he said.

Financial analysts believe the bond’s oversubscription reflects investor confidence and a stable liquidity in the local capital markets.

“That means there is enough liquidity locally and the government can tap that potential to borrow domestically and reduce foreign commercial loans which are actually expensive,” said Prof Abel Kinyondo of the University of Dar es Salaam.

However, Prof Kinyondo warned that the performance may sometimes have negative interpretation about the domestic business and investment environment.

“Sometimes, staying with idle money like that tells something about the possible risks associated with the local business environment. The government needs to ask itself why these people are staying with idle cash instead of putting them in productive activities like building some manufacturing plants?” he said, adding that something must be done to stimulate other investment opportunities.

Independent financial market analyst, Mr Christopher Makombe, said the oversubscription signifies strong investor demand and investor confidence on CRDB financial health.

He said the funding will mean faster completion of projects as CRDB supports contractors as well as government by ensuring timely payments.

“Another reason which might have made the bond attractive is the coupon payment plan which is four times a year, unlike other government bonds which pay coupon twice a year,” he said.

“To the overall Tanzania market, the news is positive and indicates a possibility of drop in yields going forward as demand for bonds increases and liquidity seems to be available for that. The bond success is setting ripe ground for other corporate issuance in the future,” he added.

CRDB Bank chief executive officer, Mr Abdulmajid Nsekela, reinforced that the bank’s ability to secure more than double the targeted amount signifies trust in the financial institution’s stability.

This achievement demonstrates the strong investment potential within our market. Investors showed great enthusiasm, knowing that their funds are secure with a well-structured project. We take immense pride in earning the trust of Tanzanians,” said Mr Nsekela.

The Samia Infrastructure Bond, the second phase of CRDB Bank’s Five-Year Medium-Term Note Programme, follows the success of the Kijani Bond, which raised Sh171.82 billion—over four times its initial target of Sh40 billion.

Capital Markets and Securities Authority (CMSA), Mr Nicodemus Mkama, highlighted that the listing of the bond on the Dar es Salaam Stock Exchange (DSE) has increased corporate and institutional bond investments by 38.9 percent, now valued at Sh1.16 trillion.

“The bond is a clear reflection of the strength of our capital markets, positioning the DSE as an integral player in facilitating investment in Tanzania’s national infrastructure projects,” said Mr Mkama.

DSE chief executive officer, Mr Peter Nalitolela echoed similar sentiments, stating that the strong investor response enhances liquidity in financial markets.

“We are pleased to see initiatives like the Samia Infrastructure Bond bringing prosperity to investors and the country,” he said.

Tarura chief executive officer, Mr Victor Seff, emphasised that the timely availability of funds will accelerate road construction and other infrastructure projects.

“We have many ongoing projects nationwide, but financing has always been a challenge. Now, contractors will receive timely payments, ensuring projects are completed as planned,” he said.

The bond offers a 12 percent annual return paid quarterly.

Original Media Source

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Britam half-year net profit hits Sh2bn on higher investment income
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Britam half-year net profit hits Sh2bn on higher investment income

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The rise in half-year net profit from Sh1.64 billion posted in a similar period last year came on the back of net investment income rising 2.5 times to Sh13.27 billion from Sh5.3 billion.

“We are confident in the growth and performance trend that Britam has achieved, supported by its subsidiaries in Kenya and the region. Our business is expanding its revenue base while effectively managing costs,” Britam Chief Executive Officer Tom Gitogo said.

“Our customer-centric approach is fueling growth in our customer base and product uptake, particularly through micro-insurance, partnerships, and digital channels.”

The investment income growth was fueled by interest and dividend income rising 34 percent to Sh9.1 billion, which the insurer attributed to growth in revenue and the gains from the realignment of the group’s investment portfolio.

Britam also booked a Sh3.79 billion gain on financial assets at a fair value, compared with a Sh1.8 billion loss posted in a similar period last year.

The increased investment income helped offset the 12.7 percent decline in net insurance service result to Sh2.13 billion in the wake of claims paid out rising at a faster pace than that of premiums received.

Britam said insurance revenue, which is money from written premiums, increased to Sh17.8 billion from Sh16.6 billion, primarily driven by growth in the Kenya insurance business and regional general insurance businesses, which contributed 30 percent of the revenue.

The group has a presence in seven countries in Africa namely Kenya, Uganda, Tanzania, Rwanda, South Sudan, Mozambique, and Malawi.

Britam’s insurance service expense hit Sh13.6 billion from Sh11.3 billion, while net insurance finance expenses rose 2.6 times to Sh12.3 billion during the same period.

“Net insurance finance expenses increased mainly due to growth in interest cost for the deposit administration business driven by better investment performance. This has also been impacted by a decline in the yield curve, which has led to an increase in the insurance contract liabilities. The increase has been offset by a matching increase in fair value gain on assets,” said Britam.

Britam’s growth in profit is in line with that of other Nairobi Securities Exchange-listed insurers, which have seen a rise in profits.

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