Kenya delays M-Pesa bond issue

The date for the launch of the bond that would be sold for as low as Sh3,000 has now been put off indefinitely.

National Treasury Cabinet Secretary Henry Rotich told the Nation that the government is assessing the market before floating the debut Sh5 billion bond.

“We are waiting to see how rates in the market behave before we set an appropriate date,” he said on the sidelines of an energy committee meeting last week.

Government officials had announced that the prospectus would be released on October 16 for the paper to go on sale on October 20.

When launched, individuals will be able to bid with as little as Sh3,000 and a maximum of Sh140,000 for the income tax-free bond.

DEBT APPETITE

CS Rotich, however, said the prospectus is not yet complete and the rates have not been set, adding that there were also clearance issues with the Nairobi Securities Exchange.

“We are also looking at (President Uhuru Kenyatta's) diary to set a date for the official launch so we do not have a tentative date yet,” he said.

The government expects the interest rates to go down as it cools off its borrowing from the domestic market.

The government issued two one-year bonds for Sh50 billion recently that pushed the rates to record levels.

The Central Bank of Kenya (CBK) announced the results of the Sh20 billion one-year bond last week, which sold at a record interest rate of 22.95 per cent.

The National Treasury is hoping to dampen its debt appetite by securing a Sh80 billion syndicated loan from Standard Chartered, Stanbic and Citi Bank in two weeks to unlock the cash crunch that has been affecting government business.

LACK OF INFORMATION

CBK Governor Patrick Njoroge last week said the country is expected to witness a gradual fall in interest rates especially as the interbank rate fell from a high of 25.8per cent at the end of September to 13.9 per cent last week.

“The T-Bill shot up after a three-month delay to react to (an) increase in the benchmark rate by 300 basis points. We want to engineer a soft landing so that everything does not come down suddenly,” he said at a press conference in CBK.

However, lack of information to an eagerly awaiting public may hurt the subscription for the first sale of the cheap bond.

Kenyans have been eagerly awaiting an opportunity to participate in the government’s risk-free paper that had been out of reach for many, requiring a minimum investment of Sh50,000.

The five-year bond would not attract any income tax and investors sitting anywhere with mobile phones can bid up to Sh140,000 daily, the maximum cap for mobile money transfers, during the week it goes on auction.

SOURCE:THE NATION