KENYA – The first batch of the Sh11 billion corporate bond issued by East African Breweries Limited (EABL) have been a huge attraction for investors with an eye on higher yields.
The three-year commercial paper, through which the beer maker raised Sh5 billion, drew bids amounting to Sh9 billion, representing an oversubscription of 80.88 per cent.
EABL Group Managing Director Charles Ireland said in an e-mail response that the money raised would be put to capital expenditure and also used for “general commercial purposes”.
“The commercial paper was a short-term debt instrument, which enabled EABL to access cheaper credit compared to traditional bank debt. We reviewed our funding needs and concluded that a medium-term note programme was more in line with our requirements,” Mr Ireland said.
Analysts have attributed the oversubscription of the EABL’s commercial paper to the higher return than the government’s three-year bonds. EABL’s bond has an interest rate of 12.25 per cent per year.
Investors will be allocated only 55.285 per cent of the bid amount of Sh9.05 billion.