MOBILE BOND

Failed M-Akiba now lists on the bourse

In Summary

• The recently opened M-Akiba trench managed to raise Sh197 million against target of Sh250 million. 

• In the first issue, Treasury offered a Sh1 billion infrastructure bond with a Sh4 billion green shoe but only managed to get Sh247 million from the market.

Treasury CS Henry Rotich, Safaricom director of Financial Services with NSE chairman Eddy Njoroge after the launch of M-Akiba. /FILE
Treasury CS Henry Rotich, Safaricom director of Financial Services with NSE chairman Eddy Njoroge after the launch of M-Akiba. /FILE

The reopened M-Akiba retail infrastructure bond has now been approved for listing on Nairobi Securities Exchange after failing to hit the target.

This tranche, which was on offer from February 25 to March 10, managed only Sh197 million against a target of Sh250 million. It attracted 82,829 new registrations.

The government reopened sale of the mobile-based Sh5 billion infrastructure bond hoping to attract more takers after low subscription two years ago.

In the first issue, Treasury offered a Sh1 billion infrastructure bond with a Sh4 billion green shoe but only managed to get Sh247 million from the market.

The bond, which enjoys a coupon rate of 10 per cent payable every six months, will be redeemed on September 7, 2020, and will have three interest payments dates starting September 9, 2019, the next being March 9, 2020, and the last on September 7, 2020.

According to NSE chief executive Geoffrey Odundo, the 79 per cent subscription rate is a clear indication of Kenyans investment appetite and an affirmation of the need for more innovative financial products in our market.

The NSE will offer a world-class trading facility for the bond as it commences trading on the secondary market, enabling any investors who missed an opportunity to purchase the M-Akiba bond to do so.
NSE Chief Executive Officer Geoffrey Odundo

Central Depository and Settlement Corporation chief executive Rose Mambo confirmed that the agency collected Sh197 million during the two weeks and now hosts a total of 459,586 M-Akiba bond CDS accounts.

"Since the first issue in March 2017, CDSC has paid out Sh 47,282,500.10 in interest to M-Akiba investors. CDSC paid an additional Sh12, 387,500.00 on March 11, 2019 bringing the total amount paid in interest to Sh 59.67 million," Mambo said.

She added CDSC has put in place robust systems that ensure the security of client information and seamless settlement of transactions.

 The trading of the bond on the secondary market will enable Kenyans to participate in the bond and enjoy a high return of 10 per cent interest that is tax exempt, proving to be very competitive against other investment instruments.