Execution is the biggest problem with this share...Equity Bank has broken even in UG and Sudan them hakuna...so unless you buy this share as a BiGOFF the chances of u getting ur money back in the short term are nil...

I wonder why @sasha claims a bond offer would be expensive. @waithaka is correct coz long-term GoK bonds are trading at lows not seen since 2003.

KCB can raise the cash today at a decent rate. Cheaper issuance costs vs Rights Issue (too late now) coz most buyers are Insurance Firms, Banks & Pension Funds... So no need to print or distribute thousands of copies + commissions are lower...

I don't really know whether to go for this rights or not.

Question: If I take up my rights and many including GOK do not, and say 10% of the rights are taken (subject to the minimum set in the offer), then what happens, I would assume this will lead to lesser new shares going into the market, this inturn will icrease the value per share and I will have made a good decision

What are the chances of the post rights price per share going below 17, and why would they go below this amount.

Can the rights be sold below Sh. 17, during their trading period, what would be the business rationale since the minimum exercise price is 17.

Someone!!!

@VVS & Wa_ithaka: Historically, bond issues are always more expensive that rights issues. Whether to raise capital via a rights issue or a bond issue will vary depending on which shoe you wear. For a shareholder, a bond issue is better for obvious reasons. For the management, a rights issue is the cheaper and hustle-free option.

Remember that KCB are raising capital to strengthen their capital base and rein in those crazy operational costs. They have the highest cost to income ratio at 71%. If I was management, I wouldn't want to raise this capital by issuing a debt instrument that imposes obligations to make coupon payment after every so many months.

Like muganda says, the antecedant costs of issuing a bond are quite high compared to those of a rights issue. The initial costs on average hit about 2.5% of the amount being raised, ergo, it would cost KCB about Kshs 375 million just to have a bond issue. Add the annual costs payable to the NSE, the registrars and fiscal agents.

@Sasha, very well said. It's an ill wind that blows no good. 15 billion bond issue would have been raised and oversubscribed in a week. The management had no choice but to look out for other interests first.