This research report was prepared by the Research Department of Old Mutual Securities Limited. Old Mutual Securities Limited is a securities trading company licensed by the Capital Markets Authority (Kenya) for the purpose of facilitating trade on the Nairobi Securities Exchange.

Here are our views on the news making headlines today for Kenya:
Beer maker, East African Breweries Limited, is seeking to raise KES 11 billion debt through a corporate bond barely two months after maturity of its short-term debt. The company targets Sh5 billion in the first tranche of the bond which will be offered to investors for two weeks beginning Wednesday for a return of 12.25 per cent. A KES 5.4 billion commercial paper issued by the brewer last year matured in January.

Our View: We note the company’s effort to improve its working capital. As per the information memorandum, the company will use a bulk of the bond, KES 5.9 billion in working capital investment and general commercial purposes while KES 5.1 billion would go to long-term capital expenditure. We expect the offer to improve the company’s operating cash flows going forward...
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