By Morris Aron

Financial institutions are mulling over missed business opportunities as corporate organisations head to the capital markets to source for funding for business expansion by floating bonds.

The banks’ unease stems from the fact that the capital markets is chalking up business opportunities as more and more organisations look for funds to expand businesses.

"Banks are pretty uneasy with the current trend where every body is going to the capital markets for funds instead of the banks," said a source who is a senior manager in a leading bank.

"This is especially so at a time when banks are choking with cash in the face of very limited lending options."

The source said while financial institutions have their vaults brimming with idle cash, the harsh economic conditions have made it unsafe to lend to households for fear of loan defaulting.

"In the circumstances, big organisations would be our biggest bet, yet they are resorting to alternative means of raising capital," the source intimated.

A section of players say the current trend is so worrying to the banks that some are resorting to underhand dealings resulting in delays in the approval of corporate bonds.

Last week, Safaricom Chief Executive Officer Michael Joseph was quoted saying the CMA needs to lessen the time it takes to approve corporate bonds, as it is currently too long. Safaricom recently floated a bond at the capital.

Others say banks should blame themselves because from the outset, they never offered alternatives even when approached by a number of corporate organisations, leaving the bonds option as the most viable means to raise funds.

Experts say in any given time, bonds are generally a cheaper and a safer option when there is a large pool of investors looking for medium to long-term opportunities to invest in.