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March 21, 2018

M-Akiba bond snapped up ahead of the deadline

Treasury CS Henry Rotich and PS Kamau Th ugge during the launch of M-Akiba retail bond at the National Treasury Buillding in Nairobi on March 23 /FAITH MUTEGI
Treasury CS Henry Rotich and PS Kamau Th ugge during the launch of M-Akiba retail bond at the National Treasury Buillding in Nairobi on March 23 /FAITH MUTEGI

The debut Sh150 million mobile-based bond, M-Akiba, has been oversubscribed ahead of close of sale of the three-year paper tomorrow. This sets the stage for raising of the remainder Sh4.85 billion in June.

As of yesterday 2.05 p.m, the retail infrastructure bond had registered total buys worth  Sh150,039,874. Bids worth Sh6.01 million were placed yesterday, the National Treasury's live monitoring unit reported.

“The bond attracted 102,632 investors who registered to invest,” the Treasury said in an update. “However, out of those, only 5,000 constituting of about five per cent  actually made purchases of the bond, with analysts saying that most investors could have been waiting for the last minute to invest in the bond.”

“This makes the average investment in M-Akiba to be Sh20,000.”

The Treasury issued the bond – the first of its kind in the world – on March 23, seeking to raise Sh150 million at an average return of 10 per cent paid every six months.

The bond’s minimum investment is Sh3,000, a move calculated at growing national savings and investments to a third of the gross domestic product as targeted in the Vision 2030 development blueprint.

“Day six had the highest number of registrations, at 11,500 while the day with the lowest registrations was day two with 3,200 registrations,” the Treasury said. “Out of the 13 days of the bond issue, the day that registered the highest buys was day 11 with Sh 14 million.”

Day six, however, registered the lowest buys at Sh2.0 million.

The bond, offered through M-Pesa and Airtel Money, got bids valued at Sh373, 600 within 15 minutes on its launch last month.

Treasury expects to use the mobile-based bond to mobilise funds for infrastructure development, easing pressure on external borrowing through crowd funding.

“This will not substitute high amounts being done by banks but will add up to the domestic borrowing,” Treasury CS Henry Rotich said during the launch.

The bond offers a three percentage points advantage over banks, currently giving interest rates at seven per cent after the capping of interest rates on September last year.

“This product will dramatically change the savings culture and increase products available for saving,” Central Bank of Kenya Governor Patrick Njoroge said

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