Category Archives: NSE bonds

Bowie Bonds

Musician David Bowie died today after a long battle with cancer. A very successful rock musician, between the 1960’s-1990’s, he gained more financial fame in 1997 with the issue of what became known as Bowie Bonds, and Investorpedia has a nice summary about them.

  • Definition: An asset-backed security;which uses the current and future revenue from albums recorded by musician David Bowie as collateral. The 25 albums a Bowie bond uses as their underlying assets were recorded prior to 1990. David Bowie used the proceeds from the bond sale to purchase old recordings of his music. In creating the bonds, he ultimately forfeited royalties for the life of the bond (10 years).
  • Bowie bonds, issued in 1997, had an interest rate of 7.9% and a life of 10 years. The Bowie bonds were purchased by Prudential Insurance for $55 million.
  • Bowie bonds represented one of the first instances of a bond that used intellectual property as the underlying collateral. The value of the bonds began to decline as online music and file sharing grew in popularity, decreasing album sales. This resulted in a downgrade by Moody’s in 2004. However, the advent of legal online music retailers renewed interest in these securities in the latter part of the decade.

Other musicians and artistes attempted to structure variants of the Bowie bond including Madonna, Michael Jackson,  Bob Dylan, the Motown songwriting team, and even photographer Annie Leibovitz.

Where is Kenya’s Euro Bond?

 The search for Kenya’s Euro Bond, launched in 2014 seems to be a question that preoccupies many people, along with where the money raised was banked and what it was used for. It also coms as Kenya has jut launched another Kshs 30 billion bond to raise funds for infrastructure which was what the Euro bond was marked for.

 There are in fact two Euro bonds:

Bond 1

Bond 1 is Kenya 2024

Issuer name Republic of Kenya
Issuer profile Central bank of Kenya has multiple interests in the development of bond markets. At a fundamental level the government Treasury bond helps to fund budget deficits.

Amount $2 billion 

Initial issue amount $1.5 billion
Start of placement 06/16/2014
Last reopening date 11/25/2014
Coupon frequency 2 time(s) per year
Issue managers Bookrunner: Barclays, JP Morgan, QNB Finance Ltd, Standard Bank
Stock exchange and OTC quotes: December 1 on  Frankfurt S.E., Berlin Exchange, Stuttgart Exchange

Bond 2 is Kenya 2019 

Bond 2Issuer Republic of Kenya
Issuer profile Central bank of Kenya has multiple interests in the development of bond markets.

Amount $ 750 million

Initial issue amount $500 million

Start of placement 06/16/2014
Coupon frequency 2 time(s) per year
Issue managers Bookrunner: Barclays, JP Morgan, QNB Finance Ltd, Standard Bank

Stock exchange and OTC quotes:  December 1 on Frankfurt S.E., Berlin Exchange, Stuttgart Exchange

Charts from

Government takes over Imperial Bank

The Central Bank of Kenya has appointed the Kenya Deposit Insurance Corporation (KDIC) to manage Imperial Bank for a year following their awareness of unsafe or unsound business conditions.

Unlike previous banks, liquidity appears to not have been a problem in the decision, and the bank has just raised Kshs 2 billion (~$20 million) via a 5-year, 15% bond that was to list today at the Nairobi Securities Exchange. Imperial Bond

Imperial was Kenya’s 18th largest bank, with assets of almost Kshs 57 billion last year, including deposits of 47 billion, loans of 31 billion and had a pre-tax profit of 2.7 billion ($27 million) in 2014.

Another blog on the intrigues at Imperial notes that the shocking development comes against the backdrop of the death of the bank’s group managing director, Abdulmalek Janmohammed, on September 15, 2015 of a reported heart attack.

EDIT: The KDIC statement notes

  • The Bank was placed under receivership due to, amongst other reasons, irregularities and malpractices in the Bank which exposed depositors, creditors and the banking sector to financial risk. 
  • Normal operations of the Bank are suspended except for collection of loan re-payments or any other payments into the Bank. Debtors are therefore encouraged to continue servicing their obligations.

EDIT: The Central Bank and the Capital Markets Authority released a joint statement

  • The Capital Markets Act, has directed the Nairobi Securities Exchange to suspend the introduction to listing and trading of the Corporate Bond issued by Imperial Bank which closed on September 17, 2015. This suspension has been imposed in the public interest and to protect the interests of investors.
  • The board of directors of Imperial Bank Limited brought to the attention of the CBK inappropriate banking practices that warranted immediate remedial action in order to safeguard the interest of both depositors and creditors.
  • CBK and the board of directors of Imperial Bank Limited are working closely on a feasible resolution mechanism for Imperial Bank Limited (In Receivership). CBK assures members of the public that Kenya’s banking sector remains safe and robust.

 Bond Moment: May 2015

Chase Bank Kenya launched a Kshs 10 billion  ($108 million) bond today. It matures in  7 years,, will pay about 13% return with a minimum investment is Kshs 100,000 ($1,080). The first trance of the multi-currency bond will be for Kshs 3 billion with a green shoe option of another Kshs 2 billion.

Centum Investments  have launched a Kshs 6 billion (~$65 million) bond that pays about 13% over 5 years. They intend to used the money raised for projects in finance, energy, and real estate. It runs from May 18 to June 5. More on the Centum projects which include the Akira geothermal plant in Ol Karia, a coal plant in Lamu, and the Two Rivers Mall project in Nairobi.

Rwanda is planning an inaugural 10-year, $14.5 million, bond for to finance energy and road projects.

Tranccentury shares are taking a hit as the company moves to raise additional cash through a rights issue to repay an $80 million convertible Eurobond that was issued in 2011.

Cash strapped Kenya Airways is looking at options to sort out it liquidity problems including a long-term bond or a fresh capital injection.

Trans National Bank lost Kshs 200 million after it asked Tsavo Securities to facilitate a bond Sale Buy Back transaction on its behalf in 2012.

Listed real estate firm Home Afrika was unsuccessful in its attempt to raise $10 million through a 13.5% bond.

Don’t want to buy bonds directly? There are bond funds at British American, ICEA Lion, Old Mutual Investments and at Dyer & Blair

CBA Bond

The Commercial Bank of Africa (CBA) has an ongoing medium term note (MTN) bond issue to raise Kshs 8 billion ($90 million) with green shoe option for another Kshs 2 billion. Investors in the MTN bond will receive 12.75% paid semi-annually for the next six (6)  years.

  • The minimum investment is Kshs 1 million ($11, 235) for the MTN that is priced in multiples of Kshs 100,000 thereafter and runs from  26 November to 10 December. Other recent financial bonds in Kenya include CFC raising Kshs 5 billion, an 11% infrastructure bond from the Central Bank of Kenya (minimum investment was Kshs 100,000), NIC Bank’s 12.5% bond which was oversubscribed by 30% in raising Kshs 6.5 billion (90% of which came from institutional investors), and Britam also got Kshs 6 billion (minimum investment was Kshs 100,000 for the 13% bond).
  • In case of an over-subscription those who apply for more than Kshs 100 million ($1.1M) of the MTN will get priority in allocation.
  • The CBA bond will be listed on the fixed income securities market segment of the Nairobi Securities Exchange
  • CBA which has 23 branches in Kenya, 12 in Tanzania, and 1 in Uganda, plans to use the funds to strengthen Tier 2 capital and fund regional expansion. CBA is looking at partnerships with other institutions to make it a stronger regional financial services platform.
  • The MTN bond is budgeted at Kshs 67 million (0.67% of the target for the fund-raising) and this is split as: arrangement fee – Kshs 40M(CBA capital), legal fee – 4M (Coulson), Accountants – 3.5M (PWC) , marketing – 10.5M (Ogilvy), and the NSE gets Kshs 0.8M while the Capital Markets Authority (CMA) gets Kshs 8 Million.
  • CBA’s EPS was Kshs 15.22 in 2013, with a 4.38 DPS, payment of over Kshs 1 billion. Shareholders include a CBA Employees Share Scheme (ESOP) who own 2.5%.