Corporate bonds stand as a cornerstone in the financial market, serving as fixed-income instruments issued by companies to raise capital.
This article delves into the dynamics of the corporate bond market in Kenya, exploring its significance, requirements for listing on the Green Bond Market, and the benefits for both issuers and investors.
Corporate Bonds in Kenya: A Catalyst for Growth:
Corporate bonds play a pivotal role in Kenya’s financial landscape, allowing companies to secure long-term capital at competitive rates.
This infusion of capital serves as a catalyst for their growth and development, fostering economic stability and prosperity.
Benefits of Corporate Bonds to Issuers and Investors:
Benefits for Investors:
- Lower Risk and Volatility:
- Corporate bonds are less risky and volatile compared to other asset classes.
- Portfolio Diversification:
- Investors can build robust portfolios by choosing from a wide array of bonds.
- Liquidity:
- Corporate bonds offer liquidity, providing investors with easier entry and exit points.
Benefits for Issuers:
- Access to Affordable Capital:
- Issuers gain the ability to raise long-term capital at competitive rates for sustainable growth.
- Efficient Capital Raising:
- Corporate bonds offer a faster way to raise capital compared to other methods.
- Diverse Investor Base:
- Companies can tap into a broad spectrum of investors, enhancing their fundraising capabilities.
Current Issuances:
Several companies in Kenya have embraced corporate bonds as a means of financing their ventures. Examples include:
- Centum Investments Limited:
- Issue Date: 16 December 2020
- Term: 3 years
- Coupon: 12%
- Maturity Date: 16 December 2023
- Family Bank Limited:
- Issue Date: 25th June 2021
- Term: 5.5 years
- Coupon: 13.75% pa
- Maturity Date: 26 December 2026
- East African Breweries Limited:
- Issue Date: 29 October 2021
- Term: 5 years
- Coupon: 12.25% pa (payable semi-annually)
- Maturity Date: 29 October 2026
- Kenya Mortgage Refinance Company:
- Issue Date: 4th March 2022
- Term: 7 years
- Coupon: 12.50% pa (payable semi-annually)
- Maturity Date: 23rd Feb 2029
Conclusion:
Corporate bonds in Kenya are not just financial instruments; they are drivers of economic growth and stability. As companies continue to leverage the corporate bond market, investors and issuers alike stand to benefit from a dynamic and efficient financial ecosystem that paves the way for a brighter economic future.
