Sh600m Sasini Bond Sells Out

Investors have taken up the whole of Sasini Limited Sh600 million bond launched two weeks ago, according to figures released on Tuesday.

Sasini managing director Peter Muthoka said that the over-subscription portrayed the confidence investors' had in the company. "This is a milestone for us and now we want to proceed with full speed on the projects Sasini has embarked upon as a part of its five-year growth and diversification strategy," he said.

Bidders for the five-year bond were to confine themselves to the prevailing five-year government bond rate plus a specified premium of between 10.25 per cent and 11.75 per cent. Bidding begun at 10.75 per cent and those bidding at this level were fully allotted. The highest bids, however, came in at 11.75 per cent.

It therefore means that 11.75 per cent was declared as the clearing yield and the effective coupon rate. All investors were allotted at 11.75 per cent including those who bid at below this level.

The bond arranger, Dyer & Blair Investment Bank, chose this method otherwise known as Dutch auction instead of the fixed price method used by local issuers. Bidders were required to submit one or more competitive bids each specifying the minimum yield (premium) acceptable.

"This is an efficient price discovery method to arrive at market determined price/yield," Dyer & Blair executive director, Mr Kabaki Wamwea said. Among other things, the money will go into expanding Sasini's tea packing plant in Mombasa and enlarging its coffee mill in Kiambu.

The main aim is to control the entire chain of production from the actual growing of its tea and coffee to processing, milling, roasting, blending, trading, packaging and selling to final consumers and exports.

With Sh600 million investment in such projects, the company forecasts its profit before tax to rise from Sh108 million next year to Sh579 million by 2012. The bond will be listed on the Nairobi Stock Exchange on Friday.