Government’s bond M-Akiba fails to reach target, again!

The first re-opening of the mobile-traded government bond M-Akiba has like the premiere issue disappointed to raise a total of Ksh.197 million against a Ksh.250 million target.

In spite of attracting close to 83,000 new participants to bring the total number of registered users on the platform to 459,586, the latest issue has performed worse off than its predecessor which raised a total of Ksh.247 million reflecting on the government’s inability to convert potential participants into full-term investors.

Re-opened to members of public on the February 25, 2019, the bond sale — collaboration between the Nairobi Securities Exchange (NSE), Treasury and the Central Depository and Settlement Corporation (CDSC) — failed to gather steam despite a two-day trading extension to March 10, 2019.

The performance of the bond will be a great disappointment to the tripartite institutions who hoped to raise a total of Ksh.3.7 billion through subsequent openings to the initial 2017 bond opening.

The trio had reset the second issue target down to Ksh.250 million from the Ksh.1 billion original goal without setting a maximum ceiling on over-subscriptions.

M-Akiba has since its launch raised a total of Ksh.594 million while paying out a combined interest of Ksh.59.7 million as at March 2019. The bond is expected to be re-deemed on September 7, 2020 and has three interest payment dates beginning September 9, 2019.

The initial M-Akiba issue was targeted at raising Ksh.1 billion with a green-shoe option of Ksh.3.5 billion was 75 percent under-subscribed raising a mere Ksh.247 million.

An audit of the bond’s failure was at the time blamed on a low investor sentiment under the cloud of the then expected 2017 elections and the lack of adequate investor education according to a study facilitated by the British-backed Financial Sector Deepening (FSD) Africa development advisory.