National Microfinance Bank Plc (NMB) is issuing a 13% interest bond aimed to everyone who wishes to invest in NMB and earn an attractive return. This is the first such bond to be issued by NMB and can be brought from any NMB branch or selected bond brokers with minimum purchase of TZ Sh. 500,000. This was shared yesterday at a press conference by Ms. Ineke Bussemaker, Managing Director of NMB.
This move is a result of the Capital Markets & Securities Authority (CMSA) granting approval to issue the first tranche of the NMB Plc Medium Term Note (MTN) Programme.
Investors in the NMB Retail Bond will earn an interest rate of 13% per annum payable half yearly for its term of three years, until June 2019; the interest rate paid is subject to withholding tax. An NMB bond is tradable, so you can sell the bond to another buyer and receive the principal before the maturity date. Investors can sell the bond before maturity on the open market through a stockbroker – in accordance with the Dar es Salaam Stock Exchange rules.
Ms. Ineke Bussemaker, Managing Director of NMB commented: “NMB is principally funded by retail deposits but there are other attractive funding options, with the NMB Retail Bond we are looking to raise TZ shs. 20billion with a green shoe option of TZS 5BN. Many investors have shown interest in investing in high quality bonds and we consider this to be a good opportunity to satisfy this need which will help stimulate the development of the local capital market and diversify our funding sources. An opportunity that allows us to mobilise funds that the bank can use to create new customer loans at favourable rates.”
Mr. Ibrahim Mshindo, Dar es Salaam Stock Exchange – Manager for Market Research and Development, said: “We are delighted to welcome to welcome NMB Retail Bonds are special for they are open for buy to the general public and can be purchased from NMB’s largest network of branches across the country, and with the support of issuers like NMB we look forward to growing the service further in the months and years ahead.”
The NMB Retail Bond will be on offer starting on 10th May 2016 to 8ths June 2016 and the interest wll accrue from this date. Applications for the NMB Bond may be made via any of the 175 NMB branches or appointed bond brokers.
National Microfinance Bank PLC is Tanzania’s leading retail bank, both customer base and branch network. With over 2 million customers, about 175 branches and over 600 ATM’s, NMB is represented in more than 95% of Tanzania’s districts. NMB serves individuals, micro and small enterprises as well as larger businesses. NMB has a strong financial record, based on years of strong and stable performance. NMB is listed at the Dar es Salaam Stock Exchange. NMB’s largest shareholders are its strategic partners Rabobank with a 35% share and the Government of Tanzania with a 32% share.
NMB pioneered major innovations in the market including agency banking (NMB Wakala), mobile banking and Pesa Fanta an ATM based remittance product targeted at the unbanked. NMB plays an important role in the agricultural value chain and pioneered warehouse receipt financing for the country’s Amcos. NMB has been awarded Best retail bank for 2015 by World Finance Magazine.
What is Bond?
A bond is an investment product in which an investor lends money to an entity (typically corporate or governmental) which borrows the funds for the defined period of time at a variable or fixed interest rate. When a customer buys an NMB bond, they are lending money to the bank. NMB promises to return the customer’s money (principle) on a specified maturity date. Until that time NMB also pays the bond holder a stated rate of interest. Interest payments that customers receive from a bond are taxable. Unlike shares/stock bonds do not give a bondholder ownership interest in the bank and the bondholder cannot vote.
NMB Bond issue
Any person with 500,000 shillings minimum can buy the bond and benefit 13% interest after every six months. So the interest will be given twice a year where by the money from this Bond will be used by NMB to provide loans to Entrepreneurs in Tanzania.
NMB is the fourth bank to issue something like this.
Questions asked during the press conference
What is the reason behind NMB doing this now? Could it be the bank is in need of funds and is going through a certain crisis?
“We planned to do this from some time ago. We could have done it earlier or later. But we think this is the good time. The opportunity now looks good. But it is not because we need any funding” said Managing Director & CEO NMB bank, Ineke Bussemaker.
NMB bank plans to make it easy for those who need capital to start a business.
Why did NMB decide to make it 20 Billion for now?
“We need test first because this has never been done before. So we need to test” said NMB Managing Director & CEO