Thursday, January 29, 2009

First IPO of 2009: GoK's Infrastructure Bond

Who is issuing: GoK
For: To finance roads, geothermal steam wells, sewers, and other dilapated infrastructure that is holding back economic growth
Amount to be raised: Ksh18bn
Minimum application amount: Ksh100k and in multiple of Ksh50k thereafter
Maximum application amount: Ksh10mn
How do I apply? Open CDS account at CBK office (Nairobi, Kisumu, Mombasa, Eldoret)
And if in Diaspora: not yet...
Application Dates: 28 January to 18 February 2009
Upside: 12.5% per annum paid every 6 MONTHs on outstanding amount, so first payment in August
Downside: None. GoK has never defaulted
Subscription: Likely to be oversubscribed

8 comments:

ka-investor said...

what happens in case of a massive oversubscription?

Concept Advisory Services Ltd said...

For the kenyans in the diaspora who already have CDSC accounts with the stockbrokers, they can apply through them...through a nominee account.

coldtusker said...

ka-investor: There will be no major over-subscription. CBK will pick the best bids i.e. those who bid the highest.

12.5% is just the COUPON RATE. The yield could be lower or higher. And there is the matter of w/tax paid if discounted & on interest.

Empower Kenya said...

The offer is very attractive for anyone who has burnt his/her fingers at the NSE.
@Concept--This is not the time to use brokers for nominee accounts. I tis very risky.

I wonder if we have competent town/municipal/city leader who can launch a municipal bond?
We need smaller towns to grow and decongest Nairobi

Ssembonge said...

Bonds should be left for high net worth individuals looking to preserve and/or diversify their wealth.

That said, 12.5% paid twice a year is very attractive, especially if you are a pensioner.

shanga said...

What is the maturity period for this bond?

MainaT said...

http://www.centralbank.go.ke/downloads/bonds/Launch%20of%20Infrastructure%20Bond.pdf. For fuller details...

MainaT said...

Ka-investor: more here http://www.centralbank.go.ke/treasurybonds/bonds_auction.html

Concept: I'd have recommended use of nominee account. 2 years ago. If brokers can eat from CDs, nominee will be even worse.
CT:no w/h tax
EmpowerK: Municipal bond might be tricky given many municipals have malnourished cash flows.
Ssem: I think you saw the situation at home.
Shanga: 12yrs