First tranche of Chase Bank bond oversubscribed

June 9, 2015
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Chase Group Managing Director Duncan Kabui said that investor confidence in the group's business model is bearing fruit as evidenced by this oversubscription/CFM
Chase Group Managing Director Duncan Kabui said that investor confidence in the group’s business model is bearing fruit as evidenced by this oversubscription/CFM
NAIROBI, Kenya, Jun 9 – Chase Bank’s issue of the first Sh3 billion tranche of its Sh10 billion Medium Term Note programme recorded an impressive 161 percent subscription rate.

With a coupon rate of 13.25pc, the pricing underpins high investor confidence in the issue. The underlying spread over government yield curve is one of the lowest achieved in the recent history of corporate issuance.

Speaking as he announced the results, Chase Group Managing Director Duncan Kabui said that investor confidence in the group’s business model, which they have been nurturing over the last 20 years, is bearing fruit as evidenced by this oversubscription.

“The success of our issue at the first tranche and the oversubscription is an indicator of the good things to come. It sends a clear signal and underscores our intent to become one of the key industry players in this market,” said Kabui.

The success of the bond allows the bank to strengthen its Tier II capital position thus supporting further business growth and expansion. Chase Bank is committed to broaden the impact and scope of the proposition to its customers by increasing access to financial services in Kenya especially to the youth, women entrepreneurs, agribusiness and SMEs engaged in sectors that have the highest impact on the lives of a majority of Kenyans.

Part of the funds will be used to finance expansion of the branch network, investment in IT and product development initiatives.

The first tranche of the Sh10 billion bond attracted and received the support of local institutional investors and individual retail investors, indicating a market that wants to partake in the growth and success that Chase Bank has realized in the past.

Chase Bank will exercise the green shoe option to take up an extra Sh1.8 billion that was left on the table after receiving bids worth Sh4.8 billion against the Sh3 billion offered.

‘”We are happy and humbled that the market saw it fit to invest their money in this bond. This is a clear vindication of our strategy to focus on SME, youth and women, which are fast growing segments. We are now well placed to further improve our product offering to this niche market,” said Kabui.

The Bank, which is celebrating 20 years of existence, has recorded impressive growth over the years notably crossing the Sh100 billion balance sheet in 2014.

The recently released Quarter 1 2015 results illustrate the sustained growth of the bank, which is well on course for another year of record profitability. Total Assets of the Bank grew by 36pc to Sh119.5 billion in Quarter 1 2015 compared to a similar period in 2014, while profit after-tax rose 47pc over the same period.

“We’re extremely happy with the performance of the first tranche especially at a time when liquidity in the money market has been considerably constrained, in the midst of an upward shift in government yields as well as other corporate issues in the Market. The performance highlights investor confidence in corporate bonds and is in line with the growth of alternative investment opportunities within the Capital Markets” said Samy Ghannam Associate Director, Corporate Finance at Genghis Capital.

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