By Nicholas Nduati
The National Treasury has extended the mobile phone-based M-Akiba bond by two months following a massive under-subscription of the one billion shillings offer.
The government had hoped to raise 1 billion shillings from the bond with the green shoe option of taking up to 3.85 billion shillings but by the close of the three-week offer on Friday last week, the offer had received bids totaling to one hundred and forty million shillings leaving a balance of 860 million shillings.
The National Treasury says the extension was informed by a surge in demand for the bond in the three days to its closing.
The lucrative Mobile based bond M-Akiba has been extended to 11th of September this year.
The under-subscription was a far cry from the success of the first issue launched in March that made Kenya the first country to issue a mobile phone-based bond.
The bond allows participation by phone users without requiring them to have a bank account.
To ensure all investors who bought the bond by the closure date of 21st July are not disadvantaged by the extension, any interest accrued to them over the extension period would be paid on a proportional basis.
As such investors who had bought the bond with the 24th July value date will be paid interest earned on or before the 11th of September this year.
The extension, however, means that investors who may have wanted to exit as soon as the bond starts trading in the secondary market will be disadvantaged as they now will have to wait until 12th of September to do so.
The bonds’ minimum investment is 3,000 shillings with a daily transaction limit of 140,000 shillings, in a move aimed at growing national savings and investments to a third of the gross domestic product.
Investors are set to be paid 10 percent interest every six months, beginning January next year.
The National Treasury expects to use the mobile-based bond offered through M-Pesa and Airtel Money and the inter-bank transfer platform PesaLink to mobilize funds for infrastructure development, easing pressure on external borrowing through local funding.