EABL corporate bond begins trading at the NSE after listing

The East African Breweries Limited(EABL) has been listed on the Nairobi Securities Exchange, where trading on the KSh11-billion issue began today.

EABL Group Managing Director and CEO Jane Karuku performed the ceremonial bell-ringing ceremony to mark the start of trading.

The five-year, fixed-rate instrument is offered at an interest rate of 12.25 per cent payable semi-annually.

EABL Medium Term Note is considered the biggest issue in the corporate bonds market

The offer was opened on October 6 and closed on October 21. The Tenor is 5 years with a maturity date of 29th October 2026.
EABL said it had received applications for Notes amounting to KSh 37,960,240,000 against the target of KSh 11,000,000,000, representing an overall subscription rate of 345%.

Investors were allotted Notes of a minimum of KSh 100,000 and the balance on a pro-rata basis in multiples of KSh 10,000.
Mrs Karuku described the Note as the company’s most successful capital-raising issue and the reception as an expression of confidence in the company’s strategic vision.

“Although we at EABL have been in the capital markets before, this was a different time to ask for money – given the prevailing economic conditions, especially relating to the COVID-19 pandemic.

Nevertheless, because EABL has a clear strategic ambition, we considered that investors would believe our story, especially given that we have shaken off a very difficult period the pandemic hit our shores,” said Mrs Karuku.

“The more encouraging aspect of this issue is that it was embraced by an impressive mix of individual and corporate investors. Individual and retail investors comprised 32% of applicants while institutional investors covered the rest,” said Mrs Karuku.
The transaction was arranged by Absa Bank Kenya Plc and Absa Securities, with Bowmans Kenya as the legal counsel and Image Registrars the registrar and paying agent.

NSE Chief Executive Geoffrey Odundo said the overall size of the debt capital markets in sub-Saharan Africa across sovereign and corporate bonds stands at about US$ 300 billion while in Kenya the value of listed bonds is US$ 26.6 billion.

While the corporate bond market is nascent, the sovereign debt market has been on a growth trajectory accounting for about 75% of the total outstanding amount.

“The performance of the EABL’s MTN is instrumental in the revival of our corporate bond market,” said Odindo.
EABL’s Medium-Term Note is now considered the biggest of the issued corporate bonds and
commercial papers in the Kenyan market.

The brewer will use the cash raised to fund expansion in production, repay debts taken in the ordinary course of business and refinance short-term borrowings as well as provide working capital.

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