Capital Markets

Flame Tree sets sights on corporate bond

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Flame Tree CEO Heril Bangera. FILE PHOTO | NMG

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Summary

  • Chief executive Heril Bangera says in the latest annual report the firm is working on issuing the bond to help the Nairobi Securities Exchange-listed firm grow.
  • Mr Bangera did not, however, specify the size of the bond but its issuance should help gauge the appetite of investors who have been more inclined to Treasury bonds.

Flame Tree Group (FTG) #ticker:FTGH intends to issue a corporate bond to fund growth despite the reduced investor appetite following loss of money in Chase and Imperial bank securities.

Chief executive Heril Bangera says in the latest annual report the firm is working on issuing the bond to help the Nairobi Securities Exchange-listed firm grow.

Mr Bangera did not, however, specify the size of the bond but its issuance should help gauge the appetite of investors who have been more inclined to Treasury bonds.

The bond plans come on the back of FTG having secured Sh905 million ($8.5 million) credit line from SBM bank to improve working capital and fund growth even as it froze payment on maturing loans in the wake of coronavirus. “There is a project ongoing to issue corporate bonds. Even if the amount we may reach is not as high as we target, still we are confident these new funds will come to support FTG,” says Mr Bangera.

FTG is involved in a range of activities such as manufacturing of plastic water tanks, mobile toilets, septic tanks, pipes, paints, fibre glasses, cosmetic products and synthetic hair.

Activity in the unsecured corporate bond market in the years leading to 2015 was fairly active until the Chase and Imperial Bank issuances brought a droughtt.

Investors are still seeking recourse on Sh4.82 billion and Sh2 billion Chase and Imperial bonds respectively after the two banks sank into receivership.

Data from the CMA shows there were only six outstanding commercial papers valued at Sh38.1 billion at the end of December last year against 20 commercial papers valued at Sh61.9 billion end of 2018.

The outstanding commercial papers have now dropped to five— Stanbic Bank #ticker:SBIC, NCBA #ticker:NCBA, EABL #ticker:EQTY, Family Bank and Real People —after Centum Investment #ticker:CTUM cleared its five-year Sh6.6 billion bond early June.