NAIROBI : Family Bank’s medium term corporate bond meant to raise Sh4 billion attracted bids for only half that amount, the bank said yesterday, hurt by unfavourable rates it offered.
The bank offered the bond – with a 5.5-year tenor – for sale early this month. The bond has fixed, floating and mixed rate portions.
The bank said in a statement it received bids worth Sh2.02 billion or a 50.4 per cent subscription rate. It
accepted all the bids. The bank said fixed-rate component of the bond had a coupon of 13.75 per cent and was discounted, while the floating rate component of the bond was priced at 250 basis points above the yield of the 182-day Treasury bill, with a bottom rate set at 12.5 per cent and a maximum of 17.5 per cent.
The mixed rate note has a 14 per cent coupon. Weighted average yields on Kenyan Treasury bills jumped at last week’s sale, with that on the benchmark 91-day paper standing at 22.492 per cent and the 182-day bill’s yield at 22.291 percent.
The privately held lender, which secured approval for a Sh10 billion multi-currency bond last month, planned to use two thirds of the targeted funds to boost lending, while the rest was meant to fund new branches, new technology and expansion into neighbouring markets in East Africa.
Family, which started as a building society before developing into a commercial bank, now has assets of Sh75 billion.