Chase Bank takes up Sh4.8bn of oversubscribed bond issue
Mr Paul Njaga, Chase Bank chief executive officer. PHOTO | FILE
The Chase Bank corporate bond has attracted over Sh4.8 billion worth of subscriptions, 161 per cent of the target set for the first tranche.
Chief executive Paul Njaga on Monday said the bank will take all the money and no more subscriptions would be accepted for the first tranche.
“We were looking for Sh3 billion (for the first tranche), the bond was oversubscribed and we got offers of Sh4.8 billion,” said Mr Njaga.
Chase Bank will exercise the green shoe option to take up the extra Sh1.8 billion left on the table.
A clause in the corporate bond’s underwriting agreement allowed the bank as the issuer to take up an additional Sh2 billion if the initial Sh3 billion is oversubscribed.
The Sh10 billion corporate bond has a seven-year tenure and is aimed at helping strengthen the bank’s capital base and financing its expansion.
Mr Njaga was speaking after the signing of a public private partnership between Chase Bank, Rabo International Advisory Services (RIAS) and the Netherlands Ministry of Foreign Affairs.
The partnership will equip Chase Bank staff with technical assistance to serve SMEs, youth and women, agri-business and innovation.
Mr Njaga said the technical assistance would help Chase bank achieve some of the targets outlined in the public-private-partnership deal.
Head of banking for Rabo International Advisory Services (RIAS) David Gerbrands said the two-year partnership would ensure the transfer of knowledge, innovation, agri-business and aim at lowering the cost of banking in Kenya.
The Chase Bank bond will pay investors returns at a rate of 13.25 per cent, the highest yielding of several corporate bonds issued over the past two years.
The recent past has seen an oversubscription of offers for corporate bonds following heavy demand.
The East African Breweries Limited (EABL) bond attracted over Sh9 billion, exceeding the Sh5 billion target for the first tranche.
UAP, CIC, Britam, NIC and CBA are other firms that have successfully raised funds through the bond market.
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