PROCESS OF BOND

ISSUANCE

PRESENTATION BY
MOHAMED HASSAN
EXECUTIVE DIRECTOR
DYER AND BLAIR INVESTMENT BANK LIMITED

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 PRE-ISSUE PREPARATION

ƒ Consult your Investment Banker

ƒ Business plan discussions
ƒ Financing required
ƒ Capital structure decisions
ƒ Debt option

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 PREPARATION OF WORKPLAN
AND TIMETABLE OF ISSUE
BOND ISSUE T IM ET ABLE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

M andate Letter
Finalise Mandate Letter

Information M emorandum
Finalise Draft I.M.for submission to CMA and NSE
Address any regulatory comments

Legal Documentation

Legal Due Diligence, Documentation/ Legal opinion

drafting for inclusion in I.M. (including conversion to
public company & finalisation of security documents)
Finalise Agency Agreements

Fina ncia l
Financial Due Diligence, Draft Report for inclusion in IM

Regulatory Approval
Obtain approval for the Issue from CMA and NSE
Obtain approval from Govt

M arketing and Book Building

Initial Market-read on key investors; continued dialogue
Appoint sponsoring stockbroker
Prepare research note and indicative terms
Evaluation of market read; prepare term sheet
Fedback on indicative term sheet
Continued dialogue with investors pending I.M. approval
Distribute Investor Pack; Road Shows
Book Building
Price Bonds
Signing; Settlement
Receipt of bond proceeds
Listing
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 APPOINTMENT OF
PROFESSIONALS

ƒ Arrangers – Investment Banks

ƒ Sponsoring Stock Brokers
ƒ Reporting Accountants
ƒ Legal counsel
ƒ Fiscal Agent and Registrar
ƒ Note trustees in case of guarantee

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 PREPARATION OF INFORMATION
MEMORANDUM

ƒ Adhere to legal requirements of Capital Markets Authority Act

ƒ Adhere NSE Rules and Regulations
ƒ Opinion by Reporting Accountant
ƒ Certification the projection by the Reporting Accountant
ƒ Legal opinion on authenticity of all documentations
ƒ Legal opinion on the Information Memorandum
ƒ Summary of the Bond issue
– Use of Proceeds
– Key investment considerations
– Financial rating or health
– Industry analysis
– Issues of Corporate Governance
– Experience and qualification of Board of Directors and Management

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 MARKETING AND BOOK BUILDING
Timing the Market

ƒ Preparation of research note and indicative term sheet

ƒ Initial market read on key investor
ƒ - To gauge their appropriate appetite and structure for
the bond
ƒ Feedback on indicative term
ƒ Evaluation of market read and preparation of final term sheet
ƒ One on One Investor visits to build commitments

6
 Review
Mandate Letter Legal Documentation Financial
Finalise Mandate
Letter
+ Legal Due Diligence, Documentation/
+ Financial Due
Diligence, Draft Report
Legal opinion drafting for inclusion in I.M. for inclusion in IM
(including conversion to public company
& finalisation of security documents)
Finalise Agency Agreements

Marketing and Book Building

Regulatory Information
Initial Market-read on key investors; continued
Memorandum
Approval
Obtain approval for + Finalise Draft I.M.for + dialogue
Prepare research note and indicative terms
the Issue from CMA submission to CMA Evaluation of market read; prepare term sheet
and NSE and NSE
Feedback on indicative term sheet
Obtain approval Address any
Continued dialogue with investors pending I.M.
from Govt regulatory comments approval
Distribute Investor Pack; Road Shows
Book Building
Price Bonds
Signing; Settlement
Listing
7
 AFTER APPROVAL?

ƒ 10 days of offer period

ƒ Formal investor group presentation
ƒ One on one road show to get commitments
ƒ Closure of offer
ƒ Announcement of allocation
ƒ Settlement on the value date
ƒ Listing
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Corporate Bond Market

Unsecured/Sec
Issuer Maturity Pricing
ured
Faulu Kenya 2010 TB+0.5% 75% enhanced
(500m)
PTA Bank (800m) 2012 TB+1% Unsecured
Safaricom (4bn) 2006 TB+1% 75% enhanced
Mabati Rolling Mills 2007 TB+1.25% 75% enhanced
(1bn)
EADB (2bn) 2006 TB+0.75% Unsecured
EADB (750m) 2007 Fixed at 7.5% Unsecured
ARM (800m) 2010 TB+1.75% Unsecured
Celtel (4.5b) 2009 TB+1.25% 75% enhanced
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Case for TTF Bond

„ The Tourist Industry has contributed

significantly to the economic revival
„ Capacity constraints in the major
attraction areas could hinder future
growth
„ New strategies, more local players and
innovative funding is required

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Funding Tourist Sector
MSE
„ The bigger players will be able to issue bonds
directly.
„ However Medium and Small Scale Entrepreneurs in
niche markets need nurturing in capacity and
funding.
„ The TTF could set up a special purpose vehicle to
raise long-term funding.
„ The TTF could use the bond proceeds for onward
lending to the Tourist Sector MSE.
„ The future is outside the box, TTF should also look
outside the box for industry growth.
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Q&A

„ THANK YOU.

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