ECONOMIC WOES IN EAST AFRICA LIKELY TO IMPACT ON AIRLINE SHARE OFFERS
Honestly this could not have come at a worse time, Central Banks pushing interest rates up, liquidity getting tighter, credit more expensive and now both Precision and KQ are in the market for floating shares said a regular aviation pundit from Nairobi to this correspondent when discussing an emerging report from Kenyas capital yesterday afternoon, that Kenya Airways may have to resort to substantial and possibly deep discounting in order to place all their new shares, with some financial analysts suggesting at least a 20 percent margin while others go even beyond that figure. We were shocked when you reported that Precision had expanded their IPO period to be able to sell here in Kenya because first Tanzania really did not want Kenyans to buy any of their shares and secondly because extending an IPO is unusual and maybe a sign how tough the market now is he then added, referring to a breaking news story filed nearly 48 hours ago. The Precision IPO extension in fact brought prompt queries from regular readers who equally disputed the reported facts but eventually learned that indeed that has been the case and that the airline itself had also confirmed the move.
Discounting share issues is not new but the level of discounting in this case for KQ when eventually announced, and the results on 15th November of the take up of the shares offered by Precision, will be an indicator just how recent economic developments have impacted on the financial instruments markets, and will in turn very likely affect airlines in the market for new aircraft vis a vis their ability to finance them at a reasonable and affordable cost. Said an occasional source from further afield in the United States, who posted a few emailed questions on the Precision story: You are not even factoring in yet the possible fallout of the Somali situation. Your region is on the brink really, and anything which could happen, a terror strike for instance, might tear right into the performance of the tourism industry. I know you dont want to write scary things about the region you love but you got to be honest to be credible. If you report you have to factor in all elements, at once and not piecemeal.
Yes, dont we all have opinions about things but as replied, the considerations what I write and how I put things are mine and mine alone and not subject to any influence peddling, positive or negative. Watch this space as more information becomes available on the performance of the Precision Air IPO and the share price at which KQ will in due course announce their share issue.
