PTA bank raises Sh24b Eurobond

November 9, 2010

, NAIRONI, Kenya Nov 9 – The East and Southern Africa Trade and Development Bank (PTA Bank) has raised Sh24 billion through the issuance of a Eurobond at the Luxembourg Stock Exchange.

This is the first time an East African issuer has raised money in the international market.

The Eurobond was 113 percent oversubscribed by international investors attracting bids worth $638 million against the $300 million the bank was seeking to raise.

PTA Bank President Dr Michael Gondwe said on Tuesday that the issue is part of its $1 billion programme to diversify the bank’s resource base and raise funding for development projects in the region.

“The bond reaffirms the bank’s developmental mandate of attracting capital flows in support of private sector development,” Dr Gondwe said.

PTA Bank sold bonds that mature on January 9, 2016 with the first coupon being paid in July 9, 2011 at the rate of 6.875 percent. The re-offer yield is 7.125 percent, he said.

The bank has an authorised capital of $2 billion (Sh161 billion) with a balance sheet valued at $1 billion (Sh80.6 billion).

Unlike domestic bonds, Eurobonds are issued on the international market and sold to global investors and are denominated in international currencies.

PTA Bank Finance Director Alex Gitari said they would issue the second tranche of the bond in the next 12-18 months depending on how fast the Sh24 billion is used.

Mr Gitari however did not disclose how much they would be seeking in the second issue.

“In that time we could come back and issue a similar amount or probably higher but what will be important at that time is that we will be seeking to lengthen the tenure from five years to about ten years,” Mr Gitari said.

Standard Bank Business Development Director John Ngumi, the lead arranger for the bond, said is successful issuance was an indication of the timeliness for Kenyan companies to seek the international market to raise capital.

“One of the things we have said as we have continued to develop our bond market, is that we see those international markets as a platform for major corporates in this country to go and tap what is virtually an inexhaustible market,” Mr Ngumi said 

Mr Ngumi challenged the government to consider issuing the much talked about Eurobond in the next fiscal year.

The government has had plans to issue a debut $500 million (Sh40.2 billion) Eurobond since 2007, mainly to create a benchmark and to raise private inflows. This was however shelved following events of the post election violence and the global financial crisis.

“My expectation is that by July next year the government will have looked at the markets and decided to mix and match. It has got a lot of domestic debt maybe it’s time to have some level of foreign debt and take advantage of what would be lower interest rates,” Mr Ngumi said.

The PTA Bank counts 17 African States as shareholders: Burundi, Comoros, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Malawi, Mauritius, Rwanda, Seychelles, Somalia, Sudan, Tanzania, Uganda, Zambia and Zimbabwe.

The People’s Republic of China is a non regional shareholder while the African Development Bank is an institutional shareholder.


Latest Articles

Stock Market

Most Viewed