The Nairobi Securities Exchange (NSE) on Monday announced the commencement of trading of the East African Breweries Plc Kes. 11 billion corporate bond.
EABL targets to use funds from the Medium-Term Note to finance investments in expanding production, repay debts taken in the ordinary course of business refinance short-term borrowings and provide working capital.
EABL Group Managing Director Jane Karuku described the Note as the company’s most successful capital-raising issue and the reception as an expression of confidence in the company’s strategic vision.
“Although we at EABL have been in the capital markets before, this was a different time to ask for money – given the prevailing economic conditions, especially relating to the COVID-19 pandemic. Nevertheless, because EABL has a clear strategic ambition, we considered that investors would believe our story, especially given that we have shaken off a very difficult period the pandemic hit our shores,” – EABL Group Managing Director Jane Karuku.
EABL & NSE Corporate Bond Data.
EABL announced on that note was oversubscribed by 245% during the offer period between October 6-21, with a bulk of investors at 68% being corporate investors.
“The more encouraging aspect of this issue is that it was embraced by an impressive mix of individual and corporate investors. Individual and retail investors comprised 32% of applicants while institutional investors covered the rest,” added Karuku.
The transaction was arranged by Absa Bank Kenya Plc and Absa Securities, with Bowmans Kenya as the legal counsel and Image Registrars the registrar and paying agent.
“This is an important achievement not only for EABL, Absa Bank and Absa Securities but more so for the private sector and the Kenyan economy at large in delivering a message that is much needed right now: that we are a strong resilient market with the ability to bounce back from global economic shocks and build back better,” said Jeremy Awori, Absa Bank Kenya PLC Managing Director.
The note will be the biggest of the issued corporate bonds and commercial papers in the Kenyan market and is currently available on the NSE.
“The overall size of the debt capital markets in sub-Saharan Africa across sovereign and corporate bonds stands at about USD 300 billion while in Kenya the value of listed bonds is USD 26.6 billion. While the corporate bond market is nascent, the sovereign debt market has been on a growth trajectory accounting for about 75% of the total outstanding amount. The performance of the EABL’s MTN is instrumental in the revival of our corporate bond market,” stated Geoffrey Odundo, NSE Chief Executive Officer.
The five-year, fixed-rate instrument is offered at an interest rate of 12.25% payable semi-annually.
"We see the 245% oversubscription as a clear demonstration of confidence not only in @EABL_PLC and the private sector but the markets in which we operate across the region." Mrs. Jane Karuku pic.twitter.com/rQ25i5Oc1o
— NSE PLC (@NSE_PLC) November 1, 2021