Safaricom has received approval to issue a Ksh.40 billion medium-term note, signalling renewed momentum in Kenya’s corporate bond market.
Analysts say the move reflects a broader shift, with more companies turning to bonds as they seek stable and predictable financing for growth.
Safaricom’s move has set the pace for a rising trend in Kenya’s corporate sector. The telco plans to issue the Ksh.40 billion bond in several tranches, including green and sustainability-linked notes, to fund infrastructure projects both locally and in Ethiopia.
“It is the highest we have seen. The quantum is at Ksh.40 billion, but when you look at their cash generation ability level even at a half year level, vis-a-vis the amount they are seeking, it is quite manageable for them,” said Wesley Manambo, Senior Research Associate at SIB.
Safaricom is not alone. East African Breweries recently issued an Ksh.11 billion, five-year fixed-rate note that was oversubscribed.
Family Bank has raised Ksh.4.42 billion through a public bond and an additional Ksh.6.2 billion via private placement. Kenya Mortgage Refinance Company’s Ksh.1.4 billion debut bond was oversubscribed nearly five times, attracting over Ksh.8 billion from investors.
According to analysts, several factors are driving this renewed appetite.
“Debt is cheaper than equity, you can imagine the process of going back to shareholders for a rights issue tends to be tedious and takes time. Whereas for debts it’s easily acceptable, and sometimes when you are seeking large amounts, capital markets tends to be conducive because one, it gives investors who are purchasing this paper the ability to exit at any time within the capital markets instruments, that is the secondary market,” said Manambo.
Observers reckon this trend signals a maturing investment landscape in Kenya’s financial markets.
“As depth comes in and companies become significant within the sectors that they are playing with and they gain market confidence, they will look into coming within the bond markets to get cheaper debt. So that speaks to an aspect of maturity of the Kenyan capital markets which is very commendable,” said Manambo.
As the corporate bond market expands, analysts note that it not only provides companies with stable financing options but also strengthens the wider capital market ecosystem. This is expected to create more investment opportunities and support key national development projects.
By Dennis Otieno
