Category Archives: NSE bonds

M-Akiba Reloaded: More government bonds via phone

On Friday the Treasury Cabinet Secretary launched the second tranche of M-Akiba, the government bonds that can be bought and traded via mobile phone. 

The first tranche of M-Akiba, worth Kshs 150 million was launched in March 2017, and marked at 10%, maturing in April 2020. They had their highest trading day on May 12 when about Kshs 345,000 was traded; usually, about Kshs 100,000 per day ($1,000) of M-Akiba are traded by investors so far. At the time of launch, the indication was that another Kshs 4.85 billion was to be raised in June 2017.

The new M-Akiba infrastructure bond issue (MAB2/2017/3) is targeting Kshs 1 billion (~$9.7 million), with a green shoe option to raise another Kshs 3.85 billion. These are also three-year infrastructure bonds (dated 24 July), paying 10% per annum, with interest paid every six months, and the minimum investment is, again, Kshs 3,000 (~$29). Payments for the new bonds will be done on mobile money such as M-pesa (by dialing *889#) as well as through Pesalink – a new service from Kenya banks that allows their customers to make payments via phone and mobile money transfers of up to Kshs 1 million  (~$9,700) per day – which is seven times greater than what they can do with mobile money, under current banking rules (set to prevent money-laundering). The deadline for investors to apply for the M-Akiba bond is July 21, and the trading commission for will be 0.1% of allocations.

EDIT (July 23 Nation): MAB2/2017/3 has been extended to 8th September and the bond will start trading on 12th September. It has been reported that investors bought Kshs 128 million before the initial deadline, and the newspaper notice of the extension mentions that these invests will be paid for interest earned between July 24 and 11th September.

‘Akiba’ means ‘savings’ in Swahili.
$1 = Ksh 103

Bond Moment: M-Akiba, EABL and other NSE Bonds

Update on NSE Bonds or bonds listed at the Nairobi Securities Exchanges and other bonds, since the last bond moment in May 2015 http://bankelele.co.ke/2015/05/bond-moment-may-2015.html.

Globally, the bond market is bigger than equities one, and according to the latest CMA Kenya quarterly statistics (PDF),  bond market turnover in Kenya has been larger than the equities one since 2009 mainly due to government bonds. In 2016, equity market turnover was Kshs 147 billion (down from 209 billion) in 2015. Bond market turnover was Kshs 433 billion (~$4.2 billion) in 2016 (up from 305 billion in 2015). Turnover has been 99% due to government treasury bonds, while that of corporates is less than 1% of bond turnover in a year – except in the years 2010 and 2011.

If one doesn’t want to buy NSE bonds directly, there are CMA-approved bond funds for investors including the Apollo Bond Fund, Co-op Bond Fund, Diaspora Bond Fund, Dyer & Blair Bond Fund, ICEA Bond Fund, Madison Asset Bond Fund, and the Old Mutual Bond Fund. These fixed income /bond funds total Kshs 1.4 billion (or 2.5% of the 57 billion) of funds management by fund managers in Kenya.

Government Bonds

  • M-Akiba: Following the successful launch of M-Akiba, Kenya’s Kshs 150 million , 10%, tax-free, 3 year bonds that were entirely sold via mobile phone (the minimum investment was Kshs 3,000 (~$30))  another Kshs 4.85 billion (~$47 million) is to be floated in June 2017.
  • Following the launch of a green bonds program, banks, under the ambit of the Kenya Bankers Association (KBA), have partnered with Nairobi Securities Exchange (NSE) towards raising the country’s first bank-supported climate change-aligned corporate debt instruments in the next six to eight months. The capital flows from the green bonds in Kenya will go towards funding bank clients that require finance for clean and sustainable development projects in the priority areas of energy, agriculture, transport, infrastructure, building and urban planning, and water and waste management…so far, banks operating in South Africa and Morocco are already tapping the green finance opportunities in partnership with local municipalities and development finance institutions. projects. Also in South Africa, the World Bank’s International Finance Corp (IFC) successfully raised a 9-year, 1 billion Rand Green Bond via the Johannesburg Stock Exchange. More on the Kenya Bankers Association Sustainable Finance Initiative.
  • The Kenya Government finance bill 2017 will give Islamic finance bonds the same treatment as conventional bonds and also allow Islamic finance products in the cooperatives sub-sector.
  • The Rwanda government is about to issue a 10 billion Rwanda franc (~$12 million), 7-year Treasury bond. It will be issued on May 24 and the funds will be used for infrastructure project and capital markets development. The bonds will be listed at the Rwanda stock exchange and trade in multiple of 100,000 francs (~$120).
  • Nigeria has asked Goldman Sachs & Stanbic IBTC Bank to advise it on the sale of a debut “diaspora bond” targeted at Nigerians living abroad. – via @kenyanwalstreet

Corporate NSE Bonds:

  • Centum announced a Kshs 2 billion one year 14.5% note for the Two Rivers Development.
  • Cytonn is seeking advisors  for their medium term notes to raise Kshs 5 billion from the public towards the financing of Cytonn real estate’s (CRE) projects including Taraji Heights in Ruaka and The Ridge in Ridgeways.
  • On Monday EABL listed the Kshs 6 billion (~$58 million) of bonds at the Nairobi Securities Exchange (NSE) as the second and final tranche of its Kshs 11 billion shilling medium term note program that was launched in 2015. The tranche attracted bids worth Kshs 8.4 billion, representing a 41% over-subscription. The bonds maturing in March 2022 will pay an annual fixed interest of at least 14.17% and the raised funds will go towards optimising operations and restructuring the brewer’s balance sheet. “This is the first corporate bond to be listed on the bourse this year, and we are confident that its success, a subscription rate of 140.9% will open the doors for more listings in the course of this year.” said Nairobi Securities Exchange CEO Mr. Geoffrey Odundo. Citi upgraded EABL as a buy, due to its low price – seeing value even as the beer market was flat. The first half of FY17 (ended December 2016) showed decent volume growth for EABL (+5% YOY) but weak sales growth (-6%) as beer demand continued to shift from mainstream to value. EABL is doing well in spirits but struggling in beer, and Tanzania continues to present a challenge. – Citi report.
  • A South African credit-only micro-finance institution Real People Investment Holdings which issued a multi-billion bond in Kenya late 2015, has received a negative rating. Global Credit Ratings (GCR) said it had downgraded the primary and special servicer quality ratings assigned, with the outlook accorded as negative.
  • Transcentury bond holders lost 50% in a restructuring buyout deal.

Other Bonds

  • The African Development Bank had led the establishment of an African Domestic Bond Index and a $200 million African Domestic Bond Fund to deepen liquidity in local bond markets. It has also issued local currency bonds in 11 countries, including Kenya, South Africa, Egypt, Ghana, Nigeria, Botswana, and Uganda. leading the African Union in mobilizing domestic resources required to execute the Bank’s five developmental priorities dubbed the ‘High 5s’. – Light up and power Africa, Feed Africa, Industrialize Africa, Integrate Africa and Improve the quality of life for the people of Africa.
  • The Africa Finance Corporation issued a US$500 million 7 year Eurobond. The senior, unsecured Eurobond which carries a coupon of 3.875% was priced to yield 4.000% and matures in April 2024. It attracted orders of US$2.4 billion, representing about 5 times over-subscription from 231 investors. The bond will be listed on the Irish Stock Exchange. The Eurobond was distributed to investors in Europe (29%), United States (25%), United Kingdom (24%), Asia (18%) and the Middle East (4%). Citi, J.P. Morgan, MUFG and Standard Chartered Bank acted as Joint Lead Managers and Bookrunners for the U.S. dollar-denominated issue.
  • FSD Africa (Financial Sector Deepening Africa) and KfW Development Bank will invest £15.3 million (~$19.8 million or Kshs 2 billion) in the African Local Currency Bond Fund enabling it to step up its engagement with developmentally important industry sectors such as green energy and housing and take on investments in fragile and conflict-affected states. ALCBF is managed by Lion’s Head Global Partners (LHGP) Asset Management LLP.
  • Bonds, Loans & Sukuk Africa “the continent’s only Pan-African debt event” takes place on 13th & 14th March 2018, at the Cape Town International Convention Centre.

Kenya Green Bonds Launched

A few days ago saw the launch of green bonds in Kenya with the signing of a memorandum of understanding between the Kenya Bankers Association, Nairobi Securities Exchange (NSE) and Financial Sector Deepening Africa (not FSD Kenya). Through this, they hope to deliver lower cost funds through capital markets to finance green projects. China is actually the leader in this along with India, but Kenya, as part of a climate bonds initiative, will be the flagship for green bonds in Africa.

NSE CEO Geoffery Odundo NSE Odundo said green bond listings at the NSE would attract impact investors while Kenya Bankers Chairman, Lamin Manjang said they hoped the first green bond would list at the NSE this year. FSD Africa has committed $600,000 to this and the IFC will partner with KBA to determine green portfolio i.e. projects that quality for such finance, from sectors such as energy, agriculture, infrastructure, transport, manufacturing. Other actives to be undertaken include and enabling small banks to take part in financing the pipeline, extending green bonds across East Africa, creating a pool of Kenya green finance experts, and promoting green Islamic finance.

More on renewable energy project finance in Kenya.

Two Rivers Development Bond

Peek at the Two Rivers bond prospectus

This week Centum investments announced a Kshs 2 billion one year 14.5% note for the Two Rivers Development Limited – which is 58% owned by Centum, 39% by Avic, and 3% by ICDC.

Two Rivers had a facility of Chase Bank to finance infrastructure developments, which they had drawn on partially when the bank closed. They also had Kshs 650 million of deposits at Chase.

Two Rivers owns 50% of Two Rivers Lifestyle Centre and 100% of phase two of Two Rivers, apartments, and offices. 50% of the mall, the largest in Sub-Saharan Africa (i.e. outside South Africa) which opened on Valentines’ Day was sold to Old Mutual in 2015 for Kshs 6.4 billion. Two Rivers Development was valued at Kshs 41 billion in March 2016.

To pay for the retirement of the bond, they are selling 11 plots of land (some residential, some mixed use, one for a hotel) which have a combines market value Kshs 6.6 billion, and a mortgage value of Kshs 5.6 billion. Interest will be paid at maturity, and the note is guaranteed by Centum Investments.

The Centum investor briefing (PDF) for 1Q2107 identifies education, leasing, and agribusiness as key areas of growth at Centum in the future.

$1 = Kshs 103

M-Akiba: Kenya’s new government bonds that are bought by phone

Today saw the launch of M-Akiba, a long awaited product that through which ordinary Kenyans tcan buy government bonds on their phones, using mobile money. The can purchase units as small as Kshs 3,000 (~$30) and earn 10%.

Some tweets about the events today: 

  • The Central Bank of Kenya governor (@njorogep) said  #MAkiba bond is in line with @CBKKenya strategy to increase the level of financial inclusivity in the economy – @NSEKenya   
  • #MAkiba is a collaborative initiative between @NSEKenya @KeTreasury @cdsckenya @SafaricomLtd @AIRTEL_KE @KCBGroup – @NSEKenya
  • Phase One of M-Akiba Runs for 3 weeks targeting Sh150M. Main offer targeting Sh4.85Bn in Q2-Q3 Will run for 3 Months – @kenyanwalstreet
  • M-Akiba bond has so far been Ksh. 535k purchased. I am surprised Kenyans were this interested. So far highest buy is at Ksh. 50k – @MumbiWarui
  • Day One Of M-Akiba; Bonds worth Ksh 1.0 Million Bought Via Mobile Phones In the first 60 Minutes http://kenyanwallstreet.com/m-akiba-retail-bond-goes-live … @kenyanwalstreet
  • To trade #MAkiba bond open a CDS account by dialling *889# either on @SafaricomLtd @AIRTEL_KE .The initial investment per account is 3,000. – @NSEKenya
  • CDSC to manage the register of the bond, offer IPO managements system and the depository and settlement services on behalf of the government – @cdsckenya
  • We have just witnessed the launch of the first M-Akiba bond at the Treasury. It has a coupon rate of 10%p.a.Tradable through the phone.- @JimnahMbaru
  • The #MAkiba bond entry level is kshs 3,000 compared to the current entry point of Ksh 50,000 for any govt securities. @M_AKIBA2017 – @NSEKenya
  • #MAkiba bond is a tax free bond that will attract a 10% interest paid biannually within a period of 3 years @CMAKenya @cdsckenya @CBKKenya – @M_AKIBA2017
  • We are receiving A LOT of transactions per sec. In case of any delays, please just try again. Thank you for the overwhelming response so far – @M_AKIBA2017
  •  UPDATE: Subscription figures- @AIRTEL_KE  Airtel Money -1,300 @SafaricomLtd  MPESA-420 Total collection KES 2.4 million. AS AT 4PM TODAY – @M_AKIBA2017

Some Blogs:  

EDIT

  • M-Akiba is a three year fixed coupon infrastructure “special limited offer” bond
  • Issue number MAB1/2017/3
  • Amount Kshs 150 million (~$1.5 million) issued in March 2017
  • Apply by *889#, and runs from 23 March to 7 April and will be allocated on a first come first served basis
  • Minimum investment is Kshs 3,000, maximum investment is Kshs 140,000 (~$1,400) per day
  • Coupon 10% a year
  • Bond will be listed on the NSE and will be tradable by phone from April 11
  • Trading commission is 0.1% of actual allocations
  • M-akiba interest is tax exempt
  • Pays interest every 6 months: on (2017) 9 Oct, (2018) 9 April, 8 Oct., (2019), 8 April, 7 Oct., (2020) 6 April
  • From a prospectus in a local newspaper.

Notes

‘Akiba’ means  ‘savings’  in Swahili
$1 = Ksh 103