NSE Says Yes to Sh5bn Barclays Bond

The Nairobi Stock Exchange on Wednesday allowed Barclays Bank of Kenya to list a Sh5 billion bond at the bourse making it the first bank in the country to borrow from the public to finance its operations. The board also approved listing of a similar paper worth Sh600 million to be issued by Sasini, and the listing of 117.6 million additional shares by CFC Bank.

The additional shares will be issued pursuant to its intended merger with Stanbic Bank. They will enable CFC Bank to acquire the entire issued share capital of Stanbic Kenya from its current shareholders - South Africa's based Standard Bank, which own 96.31 per cent of Stanbic.

The Kenya Government holds the remaining 3.69 per cent. CFC shareholders approved the merger on Monday during the bank's extraordinary general meeting. The Barclays bond approval ended speculation that the NSE's board would block the paper after reports that the bank had failed to formally apply for its listing.

The seven-year dated paper will be sold in three tranches over the next three years, with the first valued at Sh1.5 billion listing on November 19, 2007.

The bond has been priced at 0.6 per cent above the 91-day Treasury Bill rate. Set to mature in 2014, the bond will be the longest corporate paper in Kenya, and will finance the bank's long term lending and expansion strategy. Barclays has increased its branches from 62 to 104, while the number of Automated Teller Machines (ATM) have risen by 72 per cent to 85.

The bank's attempt to use the same avenue it did in 2004 to list the paper was thwarted after the market regulators failed to approve the application.

The reasons behind the refusal to grant approval was lost in the ensuing blame game between the Capital Market Authority (CMA), and Central Bank, both of who are, as of law, required to approve such a move.

Listed plantations giant, Sasini will also be making its debut in the second tier financing.