Capital Markets

Treasury to sell mobile bond in March

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Treasury secretary Henry Rotich. FILE PHOTO | NMG

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Summary

  • NSE head of enterprise innovation David Waggema on Wednesday said the three-year bond will be reopened, meaning that investors will get 10 percent in interest, tax free, with a target amount for the bond pegged at Sh250 million.
  • The pilot sale of Sh150 million in March 2017 was fully subscribed, and sold out in less than two weeks.
  • M-Akiba allows investment from Sh3,000 through M-Pesa, Airtel Money and interbank money transfer platform PesaLink.

The Treasury will make another sale of the mobile-based infrastructure bond M-Akiba in March, testing the market once again with the offer that failed to raise the targeted amount in 2017.

Nairobi Securities Exchange (NSE) head of enterprise innovation David Waggema on Wednesday said the three-year bond will be reopened, meaning that investors will get 10 percent in interest, tax free, with a target amount for the bond pegged at Sh250 million.

The pilot sale of Sh150 million in March 2017 was fully subscribed, and sold out in less than two weeks.

However, the official launch sale in June 2017 targeting Sh1 billion — with a green-shoe option of another Sh3.85 billion — underperformed raising Sh247.47 million.

The sale was hurt by what analysts said was poor public awareness of the paper and how it works, as well as bad timing given that it was sold at a time when the country was otherwise preoccupied with politics ahead of the 2017 General Elections.

“The bond sold in 2017 has so far traded Sh73 million in the secondary market. We will need to do public education ahead of the new sale,” said Mr Waggema.

He said the remaining tenor before the three-year paper matures means that investors will effectively be committing their money for just a year-and-a-half, which at 10 percent and tax-free is ahead of the prevailing yield curve for similar tenured government paper.

M-Akiba was sold in partnership with the NSE and the CDSC, unlike other bonds which CBK plays selling agent and depository role, with the bourse just providing a secondary trading platform.

M-Akiba allows investment from Sh3,000 through Safaricom’s #ticker:SCOM M-Pesa, Airtel Money and interbank money transfer platform PesaLink, unlike conventional bond issues where minimum investment is Sh50,000.