Tanzania: Standard Chartered / USAID Partner to Arrange and Issue the First Loca...

Print
 
Nov 2010
Tanzania, November, 30 2010 - Standard Chartered Bank (SCB) was the lead arranger for the Promotion for Rural Initiatives and Enterprise (PRIDE) Bond which was listed on the 15th of November, making it the first bank to facilitate a microfinance institution bond issuance in the Tanzania Stock Exchange and making PRIDE the first microfinance institution to issue a local currency bond to be traded in the Tanzania Stock Exchange.

This landmark transaction was also made possible with the support of USAID’s countryprogram in Tanzania which has provided USD52m to Tanzania in the last 18 months,helping the country mitigate the impact of the global financial crisis. USAID providedcredit enhancement, through a 75% risk-sharing guarantee for the benefit of thepurchasers of the Bonds.

USAID’s guarantee enabled Standard Chartered tosuccessfully market PRIDE’s Bond issues at affordable terms with the desired maturityand principal amount to local investors in Tanzania.Speaking at the launch event which took place at the Dar es Salaam Stock Exchange,the USAID Mission Director Mr. Robert Cunnane said, “USAID has always been a strongproponent of the private sector as we believe that is the only way to achieve sustainableeconomic growth, especially in the light of rising global food prices, supporting privateinvestment in Tanzania’s agricultural sector is of paramount importance to ensure thatrecent economic gains are accelerated, not reversed.”

Mr. Jeremy Awori, the Standard Chartered Bank Tanzania’s Chief Executive Officer,said: “As the lead arrangers of this bond we are very pleased to have used ourcapabilities to facilitate the PRIDE Bond thus boosting the access of funds to a widerpopulation in Tanzania. This is in line with our goal to support the economicdevelopment of Tanzania which ties in well with our brand promise – Here for good, aswe remain confident in our strategy to deliver long-term, sustainable economic growth inthe countries in which we operate.”

The Bank’s role included assisting PRIDE Tanzania to structure the bond, obtainregulatory approval and in conjunction with the placing agent, market the bond topotential investors. The Bank utilized both its local and international capabilities tosuccessfully execute the bond issue. The issue was a success and the total amountraised was TZS17.74bn (USD12.23m). This was 22% oversubscribed from the originalTZS14.5b (USD10m).

This issue for Pride, supported byu USAID and arranged by SCB achieved a number of  significant landmarks:

This is the debut issue for Pride Tanzania

  • The issue helped MFI in Tanzania access debt capital markets. This helps the MFI to raise local currency, diversify sources of funding and access long term funds.
  • Contributed to deepening the local currency TZS bond market
  • Leveraged USAID relationship to credit enhance the issuance, supporting better pricing for Pride and USAID having access LCY MFI asset.
  • The issue was 22 % oversubscribed

Prashant Thakker, Standard Chartered’s Global Business Head of Microfinance added “Standard Chartered has successfully leveraged its Global Development organizations relationships by working with USAID on this transaction. This demonstrates our capability of connecting DFIs and Social investors in the donor markets with the microfinance asset class in our markets in Asia and Africa.

PRIDE Tanzania, which has fifty five branches in all major districts and towns in Tanzania, aims to reach out to a wider population covering people in towns as well as rural areas. The main focus is on small scale traders and farmers. Mr. Awori said that Standard Chartered Bank has had a long and successful business relationship with PRIDE Tanzania and finds the latter capable of disseminating services to a wider population given its branch network and skilled staff. “Our partnership with PRIDE

Tanzania enables us to offer our products and services countrywide and we believe that the bond will benefit hundreds of thousands of Tanzanians thereby enhancing economic development.”On his part, the board chairperson of PRIDE Tanzania, Mr. Iddi Simba, commended Standard Chartered Bank for its professionalism in handling the process and thanked USAID for guaranteeing the bond. He urged small scale traders and farmers to come up with viable business proposals to benefit from the funding and to visit any of the PRIDE Tanzania offices throughout the country for further information.



 

Research Analysis Tools

The fund indexes, institution benchmarks and other market information displayed here are all Symbiotics designed analysis tools, created in-house by our analysts and experts. Symbiotics has one of the oldest track records in microfinance investment analysis dating back to the late 1990s; its indexes and benchmarks have been regularly used as markers by investors, asset managers, financial institutions and practitioners. These, as well as several other research products, are available through the Research Account. Click on the link below to find out more.

Learn More