Safaricom bond offer oversubscribed by 50pc

By Jackson Okoth

Listed telecoms firm, Safaricom, has closed its Sh5 billion corporate bond offer with a 50 per cent oversubscription.

It is the latest firm to seek cash from the bond market. Others who have issued debt instruments in the last nine months include KenGen (Sh15 billion), CFC-Stanbic (Sh2.5 billion), Shelter Afrique (Sh1 billion) and paint manufacturer Crown Berger’s Sh300 million commercial paper.

The first part of Safaricom’s 12 billion bond programme received applications worth Sh7.5 billion, against the Sh5 billion on offer.

The bond, part of an extensive capital-raising initiative the company is implementing, closed on Thursday last week, while allocations were completed on Friday.

Safaricom is looking for cash to fund its Sh20 billion capital expenditure this financial year, with an eye on the data market.

It is already rolling out its 3G, a faster network that will enable it handle the upsurge in data traffic as soon as Internet connectivity improves.

The Sh5 billion Safaricom offer had been divided into two options: one with a fixed rate and the other with a floating rate. Most of the applications and allocations were for the fixed component.

The fixed rate notes carry a coupon rate of 12.25 per cent per year, while the floating rate notes’ pricing will be pegged at 185 basis points above the most recent published rate for the 182-day Treasury Bill.

Rollout of projects

"We are delighted by the uptake of this bond and the excitement it has generated in the market. This represents a validation of our strategic direction by the market. Safaricom will be using the funding for general corporate capital purposes, including the rollout of some critical projects," said Safaricom CEO Michael Joseph.

The issue was put together by CFC Stanbic Bank and CFC Stanbic Financial Services, Barclays Bank of Kenya Limited and Barclays Financial Services Limited in association with Absa Capital, a division of Absa Bank Limited, as arrangers.

The joint sponsoring stockbrokers were CFC Stanbic Financial Services and Kestrel Capital (East Africa) Limited.

The reporting accountant on the issue is PricewaterhouseCoopers.

 

 

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