Listed agricultural firm Sasini benefited from a 76 per cent drop in financing costs after the tea grower retired its KES540mn corporate bond in February using a cheaper fixed rate bank loan and cash reserves. The firm slashed its finance costs to KES24mn in the financial year ended September, from KES71.9mn last year. The five-year redeemable bond issued in 2007 was earning annual interest of 11.75 per cent fixed rate and was set to mature next year. The savings cushioned Sasini’s profits, which were eroded by a lower harvest and devaluation of its tea and coffee bushes. Sasini raised the KES540mn to retire the bond through a mix of a bank loan priced at five per cent and internal cash reserves. About KES300mn was raised from reserves, according to Mr. Samuel Odalo, the group financial officer. Last year, Sasini’s net earnings grew 86 per cent to KES993mn, boosting its cash reserves. The move to retire the bond has paid off, saving the tea grower from the current surge in interest rates on borrowed money. “The move by Sasini to retire the bond was well advised because the firm was able to retire more expensive credit using cheaper loans and its own cash reserves,” said Victor Odendo, an investment manager at CIC Asset Management. “The company has utilised the excess cash generated last year better than if it would have invested in lower-yielding securities like Treasury Bills and term deposits.” Heavy rains that pounded the country last year boosted the firm’s productivity and profits, allowing Sasini to benefit fully from the rising prices of both tea and coffee. On Monday, Sasini reported a 60 per cent drop in net earnings to KES391mn, citing devaluation of its agricultural assets — including tea and coffee bushes — which eroded gains accrued from higher prices of both commodities in the international market. Businessman Naushad Merali owns majority shares in Sasini. The high commodity prices on both tea and coffee, and a weakening local currency have favoured earnings for agricultural companies, ensuring that their stocks are the most resilient on the Nairobi Securities Exchange this year. Sasini’s stock has largely remained at the same level compared to a year earlier, closing yesterday’s trade at KES12.60.