Kenyan currency bonds to be offered at NSE by AfDB

Kenyan CurrencyAlmost three months after an international ratings service gave the African Development Bank (AfDB) its highest rating, the bank is planning to sell Kenya-shilling bonds at the Nairobi Stock Exchange.

Revelations contained in a statement issued by the African Securities Exchanges Association from the annual general meeting indicate that the multilateral lender has already engaged the Nairobi, Dar-es-Salaam, and Accra exchanges for issuing bonds in local currency.

AfDB will be joining two other multilateral agencies – the African states-owned housing agency, Shelter Afrique, and the regional long-term financier, East African Development Bank – who have issued such bonds in the local bourse for years.

This July, the multilateral lender which has its headquarters in Tunis sold UgSh. 12.5 billion (KSh. 431.03 million) worth of bonds at the Uganda Securities Exchange as part of the UgSh. 125 billion (KSh. 4.3 billion) medium term programme.

The disclosures from the annual general meeting also state that the Africa Development Bank has already listed a local currency bond at the Uganda Securities Exchange. The bank has commenced discussions with Nairobi Securities Exchange, Dar-es-Salaam Stock Exchange, and Ghana Stock Exchange for the launch of the local currency bonds.

In September, Moody’s Investor Service gave AfDB a triple A (AAA) rating which indicate that its securities have minimal credit risk. In the earlier month, the multilateral bank indicated its plan to issue $40 billion (KSh. 3.4 trillion) through bonds for infrastructure projects in Africa.

In a research note released in September, the global ratings service indicated that AfDB is financially strong and has considerably reduced debt levels, is prudently run, and has strong shareholder support. It also said that its strength offset the relatively low average credit quality of the AfDB’s loan portfolio which is a result of the bank’s challenging regional operating environment.

Moody’s said that bank’s arrears-clearance mechanisms and the Heavily Indebted Poor Countries (HIPC) debt-relief programme have helped it to considerably reduce the level of outstanding arrears. But, the bank’s impaired assets are still quite high for a triple A-rated multilateral development bank. And, most of them relate to arrears from countries which are not eligible to borrow from the bank any more.

The Annual General-body Meeting of the African Securities Exchange which brought together representatives from 22 African securities exchanges was held a day before it held its annual conference where FTSE Group, a global index provider, launched a Pan African Index.

The market capitalisation weighted index series measures the performance of securities in the following countries:

Botswana, Cameroon, Cape Verde, Egypt, Ghana, Kenya, Nigeria, Ivory Coast, Uganda, Zambia, Zimbabwe, Mauritius, Morocco, Mozambique, Nigeria, Rwanda, Sudan, Tunisia, and Tanzania.

The country weights are capped at 20 per cent to ensure that the index maintains a fair representation of securities from each country.

AfDB has been a major financier of infrastructure projects with the Thika Superhighway and Athi River Namanga road being the mainstays.

Image courtesy: FreeDigitalPhotos.net

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