Government bond M-Akiba offering slides to 75 percent


Government bond M-Akiba offering slides to 75 percent
Laikipia Deputy Governor John Mwaniki rings the closing bell to mark the commencement of the secondary trading of the first re-opened M-Akiba II issue on the floor of the NSE on Tuesday June 11, 2019 PHOTO | COURTESY

In Summary

  • The State earlier in February re-awoke M-Akiba from its stillbirth initiated slumber of 2017 re-examining the market in a new Ksh.250million offer.
  • Treasury has backed the program as the solution to the democratization of the bonds market and as the catalyst to both savings and financial inclusion.
  •  M-Akiba has since its launch paid out an interest totalling Ksh.67.2million, a figure set to further increase as subsequent offers lineup for amortization beginning in September 2019.

M-Akiba, Treasury’s mobile traded bond, has hit a subscription rate of 75 percent to register a Ksh.187.5million uptake at close of sale on Friday.

The performance of the recently closed fourth issue is however representative of a marginal slide in subscription from the preceding Ksh.197 million snapped up in March.

The bond remained below its full subscription of Ksh.250million for the third consecutive issue denting Treasury’s target of tapping close to Ksh.4billion from the domestic market in the medium term.

With the initial offer of the mobile trading bond registering a full Ksh.150 million valued subscription two years ago, the State had backed the facility to top expectations only for its uptake jitters to be affirmed in subsequent offerings.

The bond’s uptake has remains well below par even as the Nairobi Securities Exchange (NSE) and the Central Depository and Settlement Corporation (CDSC), the bond’s primarily retailers, take solace in the surge in participants’ numbers.

“The belief and dream of M-Akiba remains alive. Kenyans are interested. We have had investors from all over the country. The knowledge of our financial sector is far and wide reaching,” NSE Chief Executive Officer Geoffrey Odundo said.

The number of new CDSC accounts during the 14-day re-opening to the midnight of Friday June 7, 2019 for instance increased by a further 30,232 to hit a record 505,000 ledgers.

In spite of taking pride in the rise of trading accounts, former head of the Bond Market Association John Mwaniki who headlined the listing of the bond to secondary trading on Tuesday hinted at the inadequacies in investor knowledge amidst the under subscription cloud.

Mr. Mwaniki who is now the deputy governor in Laikipia challenged the NSE to stimulate investors in counties highlighting on the muted knowledge of the bonds market at the grassroots.

“Out there the conversation is very difficult. People are yet to understand. There is a need to stimulate individuals through the advancement of investor education,” he said.

Laikipia County has already hinted at becoming the first devolved unit to issue a bond in the grassroots having proposed the sale of a Ksh.5billion infrastructure bond in November 2018 to plug its budget deficit.

The State earlier in February re-awoke M-Akiba from its stillbirth initiated slumber of 2017 re-examining the market in a new Ksh.250million offer.

Treasury has backed the program as the solution to the democratization of the bonds market and as the catalyst to both savings and financial inclusion.

M-Akiba has since its launch paid out an interest totalling Ksh.67.2million, a figure set to further increase as subsequent offers lineup for amortization beginning in September 2019.

The mobile traded bond is pre-advertised as the most accessible and profitable fixed income instrument earning an interest of an un-taxed 10 percent over the course of its tenure pegged at one and half and three years.

The infrastructure bond is set for subsequent re-openings later in 2019.

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