NIC Bank bond set to start trade on the NSE
NIC Bank will Thursday initiate the trading of its Sh5.5 billion bond on the Nairobi Securities Exchange.
The bond, which was over-subscibred by Sh3 billion, is expected to go towards strengthening the bank’s capital base and grow lending to the retail and business segments.
NIC Bank received offers worth Sh6.5 billion but exercised a Sh2 billion green-shoe option - to raise the bond issue from Sh3 billion to the current Sh5.5.
A green shoe option is a mechanism built into the bond allowing the issuer to absorb extra funds.
The bell ringing ceremony is to be officiated by NIC Bank chairman James Ndegwa to mark trading of the first tranche of a Sh8 billion bond offer approved by the Capital Markets Authority last month.
Subject to the regulator’s approval, NIC Bank plans to raise an additional Sh2 billion from its shareholders through a rights issue before end of the year, which will boost its core capital.
The institution has below the 14.5 per cent total capital to risk weighted assets ratio set by the Central Bank that is expected to come into effect at the start of next year.
As at June 30, NIC’s ratio of total capital to credit advances stood at 12.52 per cent, just 0.52 per cent above the current rate of 12 per cent.
