East African Business Week (Kampala)
Aggrey Nshekanabo and Albert Ahabwe
7 November 2009
Kampala — Eastern and Southern African Trade and Development Bank (PTA Bank) has issued a $21.3 million (Ush40 billion) corporate bond to be listed on the Uganda Stock Exchange (USE).
Stanbic Bank is playing the role of arranger and lead placing agent for the issue while the sponsoring broker and co-placing agent is African Alliance Uganda Limited.
The bank's president, Dr. Michael Gondwe told East African Business Week in an interview that there is a lot of money in Uganda that can be mobilized for onward lending to people who are interested in investing in agriculture, transport capital, machinery, mining and real estate which money will spur development.
"We want Ugandans to borrow at a cheap interest rate and the investors in the bond will earn a 14% fixed interest on their money," Gondwe said.
He said that PTA bank has now moved away from issuing corporate bonds that cut across nations but issue bonds within member states in the local currencies.
The bank will use the proceeds to finance project activities in Uganda requiring local currency.
"We were last in Uganda in 1999 and now we are back. We have issued similar bonds in Kenya twice and Tanzania and all of them were oversubscribed," he said.
He said that the bank will issue similar bonds in Malawi and three Southern African Development Corporation (SADC) member states.
The PTA bank had earlier issued a five year $8 million (Ush15 billion) as a local currency bond in 1999 which was fully redeemed on its maturity in 2004.
The bank has also issued a bond worth $25 million in Kenya that is listed at the Nairobi Stock Exchange (NSE).
"We believe in deepening the stock markets of the countries that we operate in through issuance of such instruments," he said.
PTA Bank remains one of the most well capitalized development finance institutions on the continent with authorized capital standing at US$ 2 billion while subscribed capital stands at $1.18 billion. Last year, the bank posted a 20% increase in net interest income to stand at $15.2 million, up from $12.7 million the previous year. The bank's profits stood at $12.5 million at the end of 2008, an 87% increase from the previous year's profit level of $6.6m.
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