18 March 2019

Kenya: Reopened M-Akiba Misses Sh250 Million Target, Again

The reopened Sh250 million mobile traded M-Akiba has raised Sh197 million, falling short of the targeted Sh250 million as investors remained leant on 364-day Treasury bill.

The tranche, which was on offer from February 25 to March 10 hit a subscription rate of 79 per cent, having attracted over 82,829 new registrations. The Capital Markets Authority has approved the bond for secondary trading on the Nairobi Securities Exchange (NSE).

"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," chief executive Geoffrey Odundo said on the outcome.

The bond had been structured to attract small investors with investments of as little as Sh3,000 to help fund infrastructure as well as inculcate saving culture.

The outcome defied Mr Odundo who had last month tipped the bond to outmuscle 364-day Treasury bill and two-year bond. The 364-day paper received 266.21 per cent oversubscription despite offering interest of 9.43 per cent, which is below 10 per cent offered on M-Akiba.

Listing the bond on the NSE now brings to three the number of mobile traded bonds on the bourse. In 2017, the Treasury raised Sh247.75 million, being 24.76 per cent subscription, out of Sh1 billion that was put on sale. Only the pilot bond of Sh150 million was fully taken up.

Central Depository and Settlement Corporation (CDSC) chief executive Rose Mambo said the agency now hosts 459,586 M-Akiba bond CDS accounts. This means that only a few people who opened the accounts went ahead to buy the bond.

Last week, the CDSC paid an additional Sh12.38 million bringing the total amount paid in interest to Sh59.67 million.

The CDSC had paid out Sh47.28 million in interest to about 5,509 Kenyans who bought the previous tranche.

"The CDSC will continue to perform its role as the issuing and paying agent for M-Akiba bond.

The CDSC has put in place robust systems that ensure security of client information and seamless settlement of transactions," said Ms Mambo.

Investors who bought the bond will receive interest payments in September 2019, March 2020 and September 2020 when the invested amount will also be redeemed. The Treasury plans next sales in May, July and August, each targeting Sh250 million.


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