Kenya Commercial Bank (KCB) has been overtaken by Commercial Bank of Africa (CBA) on a multi-billion shillings deal to guarantee buyer’s mobile phone based bond, M-Akiba.
CBA has won the price war beating KCB to the contract. The CBA deal was confirmed by Geoffrey Odundo, the Chief Executive of the Nairobi Securities Exchange (NSE).
KCB is said to have failed to agree with the Treasury on the cost of providing liquidity for the three-year paper.
KCB has sought three percent compensation for the value of any bond it purchases, which is similar to what the central bank gets when it buys a bond from an investor as the buyer of last resort.
The Central Bank of Kenya buys bonds from investors that have either not matured or have failed to attract a buyer at the Nairobi bourse, but at a discount of three percent of the prevailing price.
KCB was beaten to the deal for attaching a fee of 0.5 percent for the guaranteeing offer while on the other hand CBA offered a lower rate of 0.3 percent and did not demand additional compensation, the Treasury sources said.
150 million shillings was raised by the Treasury with the three year M Akiba bond becoming the first in the world to issue a government bond via the mobile phone. Investors who are into buying the bond started trading the paper yesterday on the NSE.
CBA was the first to start offering saving and lending products on mobile phones.
The second tranche of M-Akiba, worth 4.85 billion shillings, is set to open in June. We do not envisage this as a one-off. This has to be a permanent part of our financial services market architecture that offers the average Kenyan an opportunity to participate in the bonds market, Mr. Ndoho said at a bell ringing ceremony for the bond.
Analysts said CBA is poised to make a fortune, but only subject to the volumes of transactions.
Martin Mugambi, CBA Group executive director said the lender won the deal after providing the best pricing.