NAIROBI, Kenya, Sept 29 – Brokers witnessed a last minute rush for the KenGen Public Infrastructure Bond Offer (PIBO) that officially closed at 3pm on Tuesday.
Amish Gupta, an Associate Director with Standard Investment bank, the Lead Placing Agent for the offer said there was a renewed buzz and excitement around the offer following assurance of automated bond trading by November.
“Automated bond trading is said to be particularly appealing to foreign investors because it puts the KenGen PIBO as internationally compliant security with regard to international standards,” he said.
Mr Gupta expects the bond to raise the intended Sh15 billion but was guarded on whether it would be over subscribed because they\’re awaiting the full reconciliation to determine the amount raised from the applications received.
“At the moment we are sticking with the Sh15 billion because that’s what we can see so far.”
He said applications were still being collected and that it was expected agents would reconcile and batch the applications within a day to establish concrete results later in the week.
Central Depository System (CDS) settlements are also expected to be automated.
“This is particularly important for both local institution and foreign investors who see this bond as the first to be traded, delivered, settled and registered in an automated environment without any CDS settlement risks,” he said.
In the event of an oversubscription KenGen Managing Director Eddy Njoroge said the company would employ a ‘green shoe’ option to take up to an additional Sh10 billion.
A week ago Mr Njoroge highlighted the success of the PIBO saying the 60 percent threshold of Sh9 billion had been attained.
The PIBO is expected to start trading in the secondary market of the Nairobi Stock Exchange on November 9.
Twenty percent of the bond was available to the retail market while the remaining eighty percent set for both local and international institutional investors.
The decision to seek funds from the debt capital market is a break from the past where the company relied on development financial institution with inherent risks of foreign exchange fluctuations.
The offer opened on September 8 with a minimum investment of Sh100,000 with additional investments above the minimum in multiples of the Sh100,000.
The term of the bond is 10 years and interest will be paid in the first two years, while the principal sum will be redeemed every six months for eight years in equal installments.