M-Akiba mobile bond starts trading at NSE

April 12, 2017 (2 weeks ago)
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NAIROBI, Kenya, Apr 12 – The world’s first mobile traded government bond has been listed at the Nairobi Securities Exchange, 18 days after it was launched.

According to NSE, the M-Akiba bond will be traded in denominations of Sh500 and is expected to follow in the normal share trading pattern of offers for sale and purchases guided by demand and supply.

NSE CEO Geoffrey Odundo says the listing of pilot M-Akiba bond comes after a surprising oversubscription that called for its closure 5 days before the expected date.

“The government sought to raise Sh150 million in the pilot phase to see how it would work. Kenyans surprised us by oversubscribing meaning the appetite for the mobile bond was a lot.”

“We had many people, including those in the diaspora asking if we could extend the subscription as more people wanted to buy the bond,” Odundo said.

The money raised in the pilot phase is part of the Sh5 billion the government is seeking to raise to finance its infrastructure projects. The remaining Sh4.85 billion will be floated in the market in June when the government officially launches the main bond.

Investors take home an annual 10 percent interest rate, payable twice in a year, and the principle share at the end of three years.

The mobile bond is also expected to encourage a culture of saving, which traditional banks have struggled to raise. According to Odundo, only 12 percent of the entire GDP is set aside for saving.

Data released by the Central Depository and Settlement Corporation (CDSC) Reveal that a total of 108,000 CDS accounts were opened with 5,200 people buying the bond.

The M-Akiba bond had a minimum limit of Sh3,000 and a maximum of Sh140,000 per day.

Of those who bought the bond, 30 percent invested the minimum price of Sh3,000, 31 percent invested between Sh3,000 and Sh10,000 while 10 percent invested between Sh10,000 and Sh20,000. Those who invested over Sh20,000 were 25 percent.

“Only one person invested over a million shillings,” CDSC Chief Executive Rose Mambo said.

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