Absa arrangement of EABL bond grows African lenders role on Kenya’s corporate scene
Absa bank was the lead arranger of the East African Breweries Limited corporate bond that garnered an oversubscription of 245 per cent.
EABL had come to the market seeking Kes11 billion only to be rewarded by increased bidding receiving applications for nearly Kes38 billion, which signalled enhanced interest in the corporate bond market.
The last 11 months have seen the issuance and listing of the Centum Investments Company Plc Kes4 billion medium-term note with a Kes2 billion greenshoe option.
There has also been the Kes8 billion multicurrency Family Bank medium-term note which recorded an oversubscription of 147 per cent.
Last year Acorn, a Kenya-based real estate development company, successfully issued the country’s first certified green bond, raising Kes4.3 billion bond for the construction of environmentally-friendly student accommodation in Nairobi.
As of June 30 2021, the bond market turnover stood at Kes301 billion, compared to Kes228 billion registered in Quarter 3, 2020, recording a 32 per cent increase.
The boom has been steered by the growing capacity of local and continental banks to arrange financial solutions for corporates underlining recent growth in the corporate bond market.
Stanbic Bank arranged the Acorn Bond, NCBA arranged the Family Bank bond while Private Wealth Capital, the Lead Arrangers of the Centum Real Estate Bond.
Absa bank’s leading role in arranging the biggest bond issue in recent times underscores the lender’s new role after rebranding from Barclays.
Absa said the strategic move will allow it to offer more products and syndicate financing to corporate across its African markets while innovating into retail and digital space.
This offers a new opportunity for local corporates to tap into the ample liquidity offered by the bank and its linkages to grow especially post Covid-19.
The proceeds of the EABL bond will be applied to various business requirements including working capital and capital expenditure in EABL and its subsidiaries in Kenya and within East Africa.
The medium-term note programme will offer investors an interest rate of 12.25 per cent per annum payable semi-annually and will be listed on the Nairobi Securities Exchange on 1 November 2021.
‘I am delighted with the performance of the EABL Medium Term Note which is a testament of the renewed interest in the corporate bond market with growing issuer and investor confidence.’ Capital Markets Authority Chief Executive Wyckliffe Shamiah said.
Mr. Shamiah noted enhanced issuer and investor confidence in the corporate bond market with the oversubscription of 245 per cent reported for the East African Breweries Plc (EABL) medium-term notes.
