The three-year, zero coupon bond, which will be floated in the next few weeks, will come at a discount rate on the three-year Treasury bond and a market-determined margin, Centum Investment said.
"Investors who buy the bond will have an option of investing in an equity-linked component," it said in a statement.
The subsidiary, Centum Real Estate, will have a green shoe option of taking bonds worth up to 2 billion shillings more if the issue is oversubscribed, the parent company said.
Cash from the issue will fund the subsidiary's ongoing projects, consisting of 4,426 residential units, targeted at market segments from affordable to the high end, Centum Investment said.
"The bond will be secured by the projects with deposit collections flowing into a sinking fund," it added.
The bond will be carried out in Centum Real Estate's books and not on the parent company, Centum Investment, to allow the parent to stick to its policy of holding a debt-free balance sheet.
"Subsidiaries are however allowed to borrow cash to develop their projects, but this should be entirely backed by their own assets and expected cash flows from such projects," Centum Investment said.
The bond will be listed on the Nairobi bourse.
($1 = 108.7500 Kenyan shillings)
(Reporting by Duncan Miriri; Editing by Amy Caren Daniel)
