Consolidated Bank bond issue raises Sh1.7b

Consolidated Bank has managed to raise Sh1.7 billion in its just concluded bond issue that was being sold at a time when the government was in the market seeking to sell five and ten-year Treasury bonds.

The second largest among tier III or small banks in Kenya, managed to raise 84 per cent of the Sh2 billion it was seeking for onward lending, expansion and adoption of alternative technology to help grow its business.

According to official results, most investors went for senior notes which attracted Sh1.5 billion representing 87 per cent of the total subscription.

Consolidated Bank’s seven year bond Sh2 billion offer was competing with five and ten-year Treasury bond issues which are seeking Sh10 billion and which will be closing on Tuesday.

It was also competing with Treasury bill issues whose subscription rates have been low but whose yields have been going up with the government seeking to attract investors.

“This performance coming on the backdrop of a volatile and uncertain interest rates environment as well as a rather tight liquidity environment is a clear testament of confidence and endorsement of the Bank by the market” said Ndegwa Wachira, managing director, Consolidated Bank.

The bank said that direct retail participation accounted for close to 20 per cent of the offer application and that all those who applied for the medium term note will receive a full allotment.

Last week, the 91 day Treasury bill issue was oversubscribed for the first time in almost two months, by 40 per cent, while the 182 day Treasury bill issue managed a 72 per cent performance rate indicating that increasing yields are now attracting investors back into the short term government paper.

The 91 and 182 day yields rose to 13.440 and 13.288 per cent respectively at the latest auctions.

Over the past month the three month and six month papers have been poorly subscribed, attracting less than 50 per cent of the funds the government has been seeking.

Consolidated Bank’s offer was offering investors either at a fixed coupon rate of 13.25 per cent or at a floating rate that is pegged on the 182 day Treasury bill rate plus two per cent but at a minimum of 10 per cent and a maximum of 13.75 per cent and investors could bid in multiples of Sh100,000.

On the other hand, investors who opted for the government offers will get a coupon of 11.855 per cent on the five year bond and 12.705 per cent on the 10 year one and both papers are also offering a discount to be determined by the market.