Nairobi Securities Exchange (NSE) expects the re-opened Sh250 million mobile traded M-Akiba bond to offer strong competition to the 364-day Treasury bill and two-year bond.
Geoffrey Odundo, the NSE chief executive, said Monday that the 10 per cent tax-free infrastructure bond set to mature in the next 18 months offers a return above what the government has accepted from papers below two years, making it attractive to investors.
“This is technically a one-and-half year bond because it is a re-opening. If you compare that to a one-year instrument, it is a very attractive one for anyone going for short-term instrument,” said Mr Odundo.
Last week’s 364-day Treasury bill that closed last week accepted bids at weighted average of 9.49 percent. That of two-year bond was 10.7 percent. Both returns are potentially below that of M-Akiba when eventually subjected to tax.
The government hopes for better outcome from the bond unlike in 2017 when a paltry Sh247.75 million or 24.76 per cent was raised out of Sh1 billion M-Akiba bond. Central Depository and Settlement Corporation (CDSC) chief executive Rose Mambo said a technical and marketing team will carry out a drive in the coming weeks.
“CDSC has put in place a robust system to ensure security of client information and seamless settlement of clients’ transactions. There will be significant amount of work in the next two weeks to encourage uptake,” said Ms Mambo.
She added of the first issue in March 2017, CDSC has paid out Sh47.28 million in interest to about 5,509 Kenyans who bought the bond out of more than 300,000 registered potential investors. The next interest payment is expected on March 11.
Government plans to raise Sh1 billion this year from the bond. The next sales will be in May, July and August, each targeting Sh250 million.