KCB to raise 10bn/- through Islamic bond

KCB Bank plans to raise 10bn/- through the first public Islamic bond—Fursa Sukuk—with an attractive profit return payable every quarter.

The Fursa Sukuk is a Shariah compliant bond with three years maturity period that offers a profit return of 8.75 per cent per year.

KCB Bank Managing Director Mr Cosmas Kimario said yesterday the bond aims at rising at least 10bn/- from retail and corporate investors and the fund will be used to finance the lender’s Sahl Banking sharia-compliant asset portfolio.

“[The] bond guarantees a return of 8.75 per cent per year and the profit payment will be done four times in a year—every quarter,” Mr Kimario said during the launch event.

The CEO invited local investors to grab the opportunity that gives value for money in a short period of three years compared to other bonds.

The latest two-year Treasury has an interest rate of 7.60 per cent while the five-year offered a return of 8.60 per cent both paid semiannually.

The bond is sold at a minimum rate of 500,000/- and has the green shoe option of up to 5.0bn/-.

Later, the Fursa Sukuk will be listed on Dar es Salaam Stock Exchange (DSE).

Alpha Capital Head of Research and Financial Analytics, Imani Muhingo said this is the first Islamic bond to go public after the two which were private.

“I believe it shall be met with very pleasant reception to Shariah compliant investors who have been missing out on investment opportunities for a while.

“Moreover, the rate of return is competitive, somewhat 5bps [basic points] above the interpolated Weighted Average Yields of an equivalent three years T-bond interpolated from latest auctions,” Mr Muhingo said.

The KBC Sukuk bond is the third in the market where the first two issued by Imaan Finance under private placements.

KCB Sahl Banking provides financial services interest-free to its customers including individuals, businesses, companies, groups, parents, children, workers, and students.

KCB Sahl Banking provides financial services interest-free to its customers including individuals, businesses, companies, groups, parents, children, workers, and students.

KCB’s Head of Islamic Banking, ‘Sahl Banking’, Mr Amour Muro, said the fund raised will be directed to finance businesses and services that are Shariah compliant and the profit generated will be distributed to the investors.

“The profit that will be collected from KCB Sahl Banking will be distributed to the investors as dividends through Mudharaba contract,” he said.

Mudharaba is a profit-sharing contractual arrangement between an investor and a managing trustee.

KCB Bank Group is the largest bank in East and Middle Africa established in 1896 in Zanzibar. It then went to Kenya and back to Tanzania in 1997, then to Uganda, South Sudan, Rwanda, Burundi, Ethiopia and soon opened doors in Congo DRC.

The Fursa Sukuk offer is open since yesterday and will be closed on the first Monday of next month.