Investors have snapped up the the Sh11 billion corporate bond issued by East African Breweries (EABL).
The bond was oversubscribed by more than three times, giving the brewer’s strategy a boost of confidence.
The brewer said on Tuesday it had received applications for Notes amounting to Sh37.9 billion for its Sh11 billion Medium-Term Note issue, representing an overall subscription of 345 percent, in Kenya’s single largest non-infrastructure corporate bond offer.
This means that the issue was oversubscribed by 245 percent.
EABL said applicants in the offer, which was open for 15 days beginning October 6, 2021, will be allotted Notes of a minimum Sh100,000 and the balance on a pro-rata basis in multiples of Sh10,000.
The funds will be used to finance investments in expanding production, repay debts taken in the ordinary course of business and provide working capital.
The five-year, fixed rate instrument is offered at an interest rate of 12.25 percent payable semi-annually. The offer was opened on October 6 and closed on October 21 and will be listed for trading on the Nairobi Securities Exchange (NSE)from November 1.
EABL’s Medium-Term Note will be the biggest of the issued corporate bonds and commercial papers in the Kenyan market. It was arranged by Absa Bank Kenya Plc and Absa Securities Limited.
The Notes will begin trading at the NSE in the coming week.
EABL Group CEO Jane Karuku said the oversubscription is a demonstration of investors’ confidence in East Africa’s largest alcohol manufacturing business which will celebrate its centenary next year.
“We issued this Medium-Term Note based on our proven track record in the debt capital markets and we are pleased that investors have resoundingly expressed their confidence in this business, and the willingness to share value from our growth,” Mrs Karuku said.
“The fact that this achievement was delivered in the face of depressed economic conditions further signifies the belief investors have in our strategy as this business turns 100 next year,” she added.
Absa Bank Kenya Plc Managing Director, Mr Jeremy Awori, said the lender is proud to have worked with EABL as the lead arranger on the issue.
“The overwhelming success has been delivered on the backdrop of a challenging economic environment and is testament to the resilience of our private sector, the growing sophistication of our capital markets, and the important role played by strong financial institutions like Absa in facilitating growth,” Mr Awori noted.