KenGen upbeat of Bond uptake

September 17, 2009

, NAIROBI, Kenya SEP 17- The Kenya Electricity Generating Company, KenGen, was upbeat on Thursday that it’s Public Infrastructure Bond Offer (PIBO) had surpassed the 60 percent threshold of Sh9 billion.

Managing Director Eddy Njoroge said reports from brokers and other agents indicate that the retail market has already garnered Sh1.5 billion with pledges from the institutional level continuing to stream in.

“On the institutional side very many have expressed interest saying they were ready to put down either Sh1 billion or Sh2 billion. At this stage we can only hope they come through on their commitments,” he said.

Twenty percent of the bond will be taken up by the retail pool while the remaining eighty percent will be available to both local and foreign investors.

He said they had printed 10,000 application forms but agents were requesting for a further 10,000.

“It is very difficult to gauge how well the PIBO will work because we have not received the returns and we are operating with pledges.”

Meanwhile, Dyer and Blair Investment Bank Chairman Jimna Mbaru rallied investors to consider the KenGen Bond terming it the largest single opportunity in the market so far.

Mr Mbaru cited the features of the PIBO with an interest rate of 12.5 percent until maturity and the current low Central Bank of Kenya interest rates outlook as key advantages of the PIBO.

Mr Njoroge who also doubles up as the NSE Chairman said that an Automated Trading System for bonds could be ready by the end of the month.

The ATS, he said, will improve the efficiency of bond trading at the stock exchange.

Confidence in the PIBO seems to be running through the veins with Mr Njoroge adding they had already embarked on a project meant to be financed by revenue raised from the bond offer.

“We have already tendered for the Kipevu III project and we are analyzing the bids we hope to contract by October.”

Kipevu is a thermal plant expected to generate 120MW, which Mr Njoroge adds, should be ready in twelve months time.

“This project should be on-stream by December 2010 which we hope will stabilise the current situation.”

The offer closes on the September 29 and Mr. Njoroge urged more people to invest in the bond.

Minimum amount for a bond is set at Sh100,000 with additional investments above the minimum in multiples of the Sh100,000.

The decision to seek funds from the debt capital market is a break from the past where the company relied heavily on development financial institutions with inherent risks of foreign exchange fluctuations.

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