By Thuita Gatero, Managing Editor, Africa Digest News. He specializes in conversations around data centers, AI, cloud infrastructure, and energy.
East African Breweries PLC (EABL) has launched its KES 20 billion Medium Term Note Programme, with the first KES 11 billion tranche now open. The Notes will be listed on the Nairobi Securities Exchange (NSE), offering investors an 11.8% annual interest rate over a 5-year tenor.
📅 Offer opens: 27 October
📅 Closes: 10 November
Now, for anyone not fluent in finance jargon, a medium-term note programme is simply a structured way for a company to borrow from the public over a defined period, longer than a short-term loan, but not quite a lifetime commitment like long-term bonds. Think of it as borrowing with flexibility: you can issue several notes under one approved “umbrella,” instead of seeking new approvals each time.
The Return and the Risk
An 11.8% fixed rate in this economy? That’s enough to raise eyebrows. Kenya’s 5-year sovereign bond currently hovers around 11.0–11.5%, meaning EABL is effectively borrowing with almost zero risk premium, a flex in the corporate debt market.
Put simply, that’s like borrowing KSh 1 million for your business at nearly the same rate the government borrows, without anyone doubting your ability to pay back. It signals confidence in EABL’s creditworthiness and book-building strength.
But it also raises a fair question: are investors buying this note for returns or diversification?
If you’re chasing returns, you watch three signals:
- Inflation-adjusted yield – what your money is really earning after inflation.
- Default risk – the odds your borrower can’t pay back.
- Liquidity – how easily you can sell it if you need cash.
If you’re diversifying, Warren Buffett would argue you’re just minimizing correlation not maximizing return. You’re simply spreading your eggs across different baskets, not expecting one to hatch golden returns.
If you’re chasing double-digit alpha, Oak Capital, Nabo Capital, Kuza Asset Management, and other private funds can get you north of 15%, but with far higher risk exposure and entry thresholds.
Though the Note will be listed on the NSE, secondary market activity is typically thin. In simpler terms, if you want to sell your bond mid-way, finding a buyer might not guaranteed.
What’s “Normal” Returns Anyway?
My analysis focuses on baseline market conditions not Black Swan events. That means I’m assuming regular economic cycles: periods of expansion, slowdown, and recovery not global pandemics or coups.
Within such cycles, the key question is issuer credit strength, how well a company can service its debts through consistent cash flow, strong revenues, and manageable leverage. And here, EABL has historically ticked those boxes, even amid higher excise taxes and shifting consumption patterns.
From a borrower’s point of view, locking in 11.8% over 5 years is a strategic play. For a company as leveraged as EABL meaning it already carries significant debt, this move helps spread out repayment pressure, manage liquidity, and signal market confidence.
A cash conversion cycle, for those new to corporate finance, is how fast a company turns its inventory into cash. EABL’s is healthy, meaning it can pay bills, reinvest, and still have enough left to toast its investors.
Still, the bigger question looms: is this sustainable? The company may need to restructure its financing mix and reduce reliance on short-term borrowings.
Some people are making an argument that “Kenya doesn’t benefit,” and they’re not wrong. When blue-chip firms raise billions, most of the capital is subscribed by institutional investors, not ordinary Kenyans. It’s a reflection of capital market inequality, a system still out of reach for many.