The Treasury is reopening its ground-breaking mobile-based bond M-Akiba for the third time seeking to raise Sh500 million from investors.
The infrastructure bond has its minimum subscription set at Sh3,000, meant to make it accessible to the masses, unlike normal Treasury bonds that have a minimum subscription amount of Sh50,000.
The latest reopening of the bond means that investors are essentially buying a one-year paper, given that the issue matures in September 2020 — it was initially sold as a three-year paper in 2017.
The bond pays investors a tax-free 10 percent interest, which is higher than the 9.19 percent paid by the one-year Treasury bill, which also attracts a withholding tax on the interest.
“Applications must be received by midnight on September 6, 2019. The bond will be traded on the NSE (Nairobi Securities Exchange) via mobile phones commencing Tuesday, September 10, 2019,” said the bond’s selling agent, Central Depository & Settlement Corporation (CDSC), in a statement.
The government has so far floated offers worth Sh1.65 billion on the M-Akiba bond programme, with the latest offer set to raise this to Sh2.15 billion.
This includes the Sh150 million pilot offer in March 2017, the debut sale of Sh1 billion in June 2017, and two re-openings of Sh250 million each in February and May.
The Treasury, however, only managed to raise Sh782 million from these sales, pointing to a need for wider public education on investing in government securities.
After hitting full subscription in the pilot offer, the government was only able to raise Sh247.75 million in the Sh1 billion debut sale, on top blamed on the general elections.
The February 2019 sale raised Sh197 million, and the June sale Sh187.52 million.