Family Bank bond sale undersubscribed
28 October 2015, 19:14
Nairobi - Family Bank's medium
term corporate bond meant to raise 4 billion shillings ($39.37
million)attracted bids for only half that amount, the bank said
on Tuesday, 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
The bank said in a statement it received bids worth 2.02
billion shillings, or a 50.4 percent subscription rate. It
accepted all the bids.
The bank said fixed-rate component of the bond had a coupon
of 13.75 percent 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 percent and a maximum of 17.5 percent.
The mixed rate note has a 14 percent 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 percent and the 182-day bill's yield at
The privately held lender, which secured approval for a 10
billion shilling 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 75 billion
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