The Capital Markets Authority (CMA) has introduced new regulations allowing Kenyan companies to issue bonds in East African countries, expanding their funding opportunities. These regulations, detailed in Kenya’s gazette supplement No 204, aim to enhance financial integration in the region.
Under the new rules, local firms can raise capital by issuing bonds in any East African country without restrictions on fund usage, provided transparent disclosure. The minimum bond size is set at the local currency equivalent of $850,000 (approximately Sh122 million), with companies having the flexibility to choose the currency of issuance.
This move aligns with the East African Community’s goal of attracting more investors and issuers, thereby expanding market opportunities. Sovereign, quasi-sovereign borrowers, and treaty organizations are exempt from certain capital and net asset thresholds.
Companies must select a primary jurisdiction for prospectus lodgment, with simultaneous submission to regulators in other targeted jurisdictions for approval. Maintaining a valid credit rating throughout the issuance period is required, ensuring investor confidence.
This development comes at a pivotal time for the Kenyan corporate debt market, which has faced challenges due to defaults by prominent entities. The new regulations aim to strengthen oversight and governance in bond issuances, fostering economic growth across the region.
With these progressive measures, Kenyan companies are poised to tap into regional funding sources, bolstering their resilience and contributing to East Africa’s financial integration.
photo source: Google
By: Montel Kamau
Serrari Financial Analyst
11th March, 2024
