Banks hold edge in M-Akiba bond

National Treasury Cabinet Secretary Henry Rotich launches the M-Akiba bond offer at Nairobi Securities Exchange (NSE). He was accompanied by NSE Chairman Samuel Kimani (left), Central Depository and Settlement Corporation CEO Rose Mambo and Capital Markets Authority CEO Paul Muthaura. [Photo: Jonah Onyango, Standard]

Banks have the opportunity to reap big from the just-launched Sh4.85 billion M-Akiba bond that was a preserve of two telcos in the initial offer.

Riding on their newly launched PesaLink switch, a product developed by Kenya Bankers Association (KBA) through its subsidiary Integrated Payment Services, lenders will be well placed to muscle out the telcos on volumes.

Whereas Safaricom’s M-Pesa and Airtel’s Airtel Money can only transact up to Sh140,000 per day, PesaLink can handle up to Sh999,999.

Speaking on Friday during the launch of the Sh1 billion phone-based bond that comes with a greenshoe of Sh3.85 billion, National Treasury Cabinet Secretary Henry Rotich said the bank system is now in the game.

“Kenyans have an option of transacting through M-Pesa and Airtel Money or PesaLink, which has now been integrated into the system,” he said.

This would make it easier for those who want to invest in big volumes, he added.

A last-minute pitch handed banks room to trade the bond as Treasury closed talks with Kenya Bankers Association on Wednesday evening.

Delays in roll-out also helped the lenders get into the lucrative deal.

According to a prospectus seen by Weekend Business, the bond was meant to go online on Monday, giving banks time to lobby to participate in the sale.

In the Sh150 million limited offer bond issued in March, investors purchased Sh142 million through M-Pesa while Airtel Money handled Sh8 million.

The entry of PesaLink is set to change the game. Rolled out in mid-February on pilot phase, the switch transacted more than Sh2.5 billion in the four months to June.

KBA Chief Executive Habil Olaka said 90 per cent of customers have already signed up and 26 banks are on board, while the remaining 16 are awaiting approvals.