CRDB’s Kijani bond heads for oversubscription

DAR ES SALAAM: Debt market analysts are predicting a notable oversubscription for CRDB Bank Kijani bond which its primary offer ends today.

The medium note five-year multi-currency bond for sustainability development was on sale for the last five weeks and sought to raise a principle of 40bn/- with a green shoe option of 15bn/-.

Alpha Capital’s Head of Research and Financial Analytics, Mr Imani Muhingo said that the market experienced a wide campaign throughout the CRDB’s branch network and they already had an anchor investor leveraging on the bank’s economic significance.

“We expect a notable oversubscription,” Mr Muhingo, told ‘Daily News’ on Thursday.

CRDB Group CEO Abdulmajid Nsekela said in London, UK recently that the World Bank through International Financial Corporation (IFC) committed to invest 40 per cent on its Green ‘Kijani’ bond to facilitate sustainable financing.

“There are numerous international investors committed to investing in the Kijani bond,” Mr Nsekela said.

The Kijani bond offers a 10.25 per cent interest rate and the proceeds will be directed to sustainable projects to boost and mitigate climate change.

Orbit Securities Chief Executive Officer Mr Godfrey Gabriel said the bond oversubscription is imminent though the exact level will be known after the primary offer closed today.

“The tendency is encouraging and we are surely expecting oversubscription,” Mr Gabriel told Daily News at the sideline of the firm’s investors’ day to mark customer service week.

Vertex International Securities Advisory and Capital Markets Manager Mr Ahmed Nganya said the bond offers the opportunity to invest in projects that have positive impacts on the environment, thus seeing the oversubscription on the horizon.

“Kijani bond brings a continuing exploration of a prominent field of impact investing, which focuses on Environment, Social, and Governance (ESG) areas and offers an opportunity to invest in projects that have a positive impact on the environment, first in our market.

“The market should expect more of these bond products going forward, providing investors an opportunity to diversify their portfolios and accessing avenues, which were once unavailable in the market,” said Mr Nganya.

Generally, the corporate bond segment in the country has been bolstered over the past 12 months.

The market witnessed the public issuance of one Sukuk and two corporate bonds, all of which garnered subscription levels well exceeding 110 per cent resulting to a total collection of some 61.2bn/-.

Zan Securities Advisory and Research Manager Mr Isaac Lubeja said that given the market metrics, investors could be optimistic about the prospects of the bond, especially considering its attractive 10.25 per cent annual coupon rate.

“The annual coupon rate which is benchmarked at 165 basis points higher than the coupon rate on a five-year Treasury bond…is well-positioned to attract investor interest and achieve a high subscription rate,” Mr Lubeja said.

The bond is the first tranche of the integral component of CRDB’s multi-currency Medium Term Note (MTN) programme valued at 300 million US dollars.

Parallel with the Kijani bond, CRDB is attractive for impact investors given its accreditation with the UN Green Climate Fund (GCF) which opens the bank to a financing chest of up to 250 million dollars per single green project.

CRDB operates four subsidiaries, including two regional commercial banks in Burundi (2012) and DRC (2023), a local Insurance firm (2022), and a philanthropic arm, CRDB Foundation.

CRDB serves 3.4 million customers through a network of 250 branches in Tanzania, six branches in Burundi, and one in Lubumbashi, DRC, along with 28,241 agents as of December last year.

Over the past decade, CRDB Bank has shown substantial growth, with its revenue increasing from 358bn/- to 1.1tri/-.

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