I&M Bank Kenya will use part of the proceeds from its May corporate bond to retire dollar denominated debt to the tune of $50 million (Sh6.5 billion) and mitigate the firm’s exposure to elevated risks stemming from carrying hard currency debt on its balance sheet.
The bank is in the market with a five-year year bond issuance priced at 12.2 percent seeking to raise Sh10 billion with a green shoe option of up to 30 percent, indicating that the lender could raise as much as Sh13 billion depending on investor appetite.
I&M Bank Kenya’s leaning towards local currency debt comes at a time when the evolving macroeconomic environment is being characterised by growing pressure on the country’s foreign exchange position owing to spillovers from the war on Iran.
Kenya’s foreign exchange reserves closed April at $13.22 billion (Sh1.71 trillion) down from a peak of $14.59 billion (Sh1.88 trillion) at the start of March as the Central Bank of Kenya moved to support the local unit amidst rising pressures from the global markets.
“We’ve got about $50 million of Tier II debt that we have on our books with varying dates of maturity, some being as early as 2027 and we felt that we needed to be able to replace that," I&M Holdings regional CEO Kihara Maina told the Business Daily.
"This was the right time to go to market because it allows us to front-load our planned local currency debt raise as well as anticipate the maturities that are coming as well as build up a lending pipeline.”
He said the lender has always preferred to issue Kenya Shilling debt but the realities of the market in the past few years have been such that it was difficult to sell this type of corporate debt. The last two issuances the bank did were in US dollars, one being an issuance to the International Finance Corporation, he noted.
The new bond which is being arranged by Standard Investment Bank opened on April 30 and will be closing on May 15 at 5 pm with the listing on the Nairobi Securities Exchange (NSE) slated for May 21.
I&M Bank Kenya’s latest bond issuance is part of a larger Sh20 billion Medium-Term Note programme through which the institution is looking to strengthen its capital position to support accelerated lending.
The bank has in the recent past been aggressive in making forays into the vast retail segment in the market, with its loan book having closed 2025 at Sh217 billion.
“We have been expanding into the retail and micro, small and medium size enterprises space as part of our Imara Strategy. A lot of our clients in that space want to borrow long-term and on a fixed rate basis. This market particularly likes fixed rate paper,” Mr Maina says.
I&M Bank’s net profit for the year ended 2025 stood at Sh15.3 billion, 30.4 percent higher than the bank registered in the previous year. The bank’s earnings were driven by a 16.9 percent increase in net interest income to Sh34.4 billion and a 38.3 percent increase in non-interest income to Sh12.4 billion.
