I&M Bank is seeking Ksh. 10B in the corporate bond market in Kenya

The Kenyan capital market is experiencing a significant shift as leading corporations increasingly turn to the domestic debt market to fund expansion.

I&M Bank Limited’s recent announcement of a Ksh. 20 billion Medium-Term Note (MTN) programme is the latest in a series of high-profile issuances, following successful debt raises by Safaricom and EABL.

I&M Bank is currently seeking to raise Ksh. 10 billion (with a Ksh. 3 billion greenshoe option) in the first tranche of its multi-year programme. Offering a competitive 12.20% interest rate, the bank is positioning this 5.5-year bond as a cornerstone for its next phase of growth.

The funds are earmarked for bolstering Tier II capital and expanding the bank’s lending capacity, a move that aligns with the current trend of financial institutions seeking stable, long-term funding outside of traditional deposits.

The momentum for these large-scale issuances was accelerated by Safaricom’s Ksh. 15 billion corporate bond, launched in late 2025. As Kenya’s most profitable company, Safaricom’s entry into the bond market was seen as a major vote of confidence in the NSE’s Fixed Income Securities Market Segment.

Safaricom’s bond was designed to fund its ongoing expansion into Ethiopia and to diversify its funding sources. The massive interest in the Safaricom bond proved that there is significant appetite among both institutional and retail investors for high-quality corporate debt, particularly when offered by market leaders.

Before I&M and Safaricom, East African Breweries PLC (EABL) set the gold standard for corporate bonds in the region. EABL has a long history of successful debt raises, most notably its Ksh. 11 billion medium-term note, which saw a staggering 273% oversubscription.

EABL’s success demonstrated a crucial lesson for the Kenyan market: investors are willing to move away from government securities (T-Bills and T-Bonds) if reputable companies offer transparent terms and competitive yields. This EABL effect paved the way for the current wave of issuances, giving banks and telcos the confidence to approach the market for multi-billion shilling sums.

Why the shift to bonds?

For Kenyan giants like I&M, Safaricom, and EABL, corporate bonds offer several advantages:

Fixed Costs: Unlike bank loans with floating rates, bonds allow companies to lock in a fixed interest rate, providing better financial predictability.
Unsecured Funding: Many of these notes, including I&M’s, are unsecured, giving companies greater operational flexibility compared to traditional collateralized loans.
Investor Diversification: These programmes allow companies to tap into the liquidity held by pension funds, insurance companies, and high-net-worth individuals.

What this means for investors

For the average investor, the arrival of these bonds provides a critical alternative to the volatile equities market. While the NSE 20 Share Index can fluctuate based on global trends, fixed-income notes like the I&M 12.20% bond offer a steady, predictable income stream.

Key Dates for the I&M Issuance: