hi all

well the only good things about this pibo is that it shall herald the advent of a bond OTC market in Kenya..very excitin...thats about all thats good about this pibo...the redeemable aspect of the bond makes the de facto coupon of the bond 10.5 pct if my calculations are not flawed..heck even if you were to ignore the fact that the yield is 10.5...the 12.5 coupon means that kengen is trading at 80 basis points above the GOK yield curve? very ambitous in my view...i will giv this one a miss...anyway i wud advise anyone takin it up to seek to punt it as opposed to holdin it to maturity...happy trading otherwise

Kengen PIBO link

The thicker the thigh the sweeter the pie.

With negative cashflows how is kengen going to pay the interest on this debt.
12.5% * 15 billion *10 years =18.75 billion over the ten years paid during the first 2 years.
The 15 billion is payable in equal instalments over 6.25 years .That works out to 1.2 billion shs every 6 months.
The projects they are implementing are VERY unlikely to generate this kind of income let alone cashflows.
This bond is what they would call a JUNK bond on wall street. The risks are just too high that the company will find it hard to service the debt.
Last year they paid a dividend of dividend around 2 billion shillings.They are definitely not going to maintain this kind of payout meaning they are going to shaft the shareholders big time.Expect no dividend over the next 4-5 years,maybe only a token payout (0.10 or less even).
One wonders why they did not borrow a part of the money externally,with the current weak shilling and low global interest rates they would have gotten a good deal. The shilling is more likely to appreciate against the dollar than weaken from here.
This is rough analysis and I encourage SKERIANS to criticise and/or correct my back of the envelope calculations.




Invest with alpha not leveraged beta

@ Ericks,

Horizon 1 projects

Hydro -101 Mw
Geothermal-317.5 Mw
Thermal-120 Mw
Wind-5.1 Mw

The thicker the thigh the sweeter the pie.

Should I buy the bond or the company's share?

Or would it be advisable to sell my shares in KENGEN and put the money in the bond?

Behind the gardens...Behind the wall...Under the tree (Including: Red...Dark Blue...Yellow)