CFC Stanbic Bank bond raises Sh5.1 billion for expansion

Kenya: CFC Stanbic Bank has announced an over-subscription of its Sh4 billion bond by 27 per cent.

Chief Executive Officer Greg Brackenridge hailed the success of the bond, saying the outcome demonstrates a robust investor appetite for bonds and the strong faith investors have in the bank.

He explained that the seven-year bond jointly arranged by CFC Stanbic bank and SBG securities raised Sh5.08 billion with fund managers taking 88 per cent of the notes. Insurance companies and retail investors, he added received 9 per cent and 3 per cent.

This was the first tranche of the bank’s Sh5 billion multi-currency medium-term note programme which also allows for the use of credit-linked notes. Brackenridge, who was speaking during a breakfast meeting at a Nairobi hotel yesterday, noted that the bank continues to make gains in providing longer term loans to both personal and business customers, adding that the bond would boost the bank’s lending portfolio.

“The proceeds will boost the bank’s capital position and on-lending to the customers,” he explained. He said that “With a strong capital base it will be possible for us to undertake intended projects.”

For example, he pointed out, in the current financial year the intention of the bank is to expand its branch network by four branches as well as considering expanding into the region market such as Ethiopia.

The bond, priced at a fixed coupon rate of 12.95 per cent, also qualifies as Tier II capital, further strengthening the bank’s already sound total capital position. Interests will be paid semi-annually in June and December each year starting June this year.

“Going forward we will issue more notes to seek more funds to finance our activities. Though the same will depend on the prevailing market dynamics, we are optimistic the market will be robust for us to grow our business,” Brackenridge added.