State plans to cross-list sovereign bond

The Government plans to cross-list its $2 billion (Sh180 billion) sovereign bond on the Nairobi Securities Exchange (NSE).

This comes after the NSE management stated that plans are underway to introduce trading of multi-currency denominated bonds on the bourse in a move that would also pave way for the cross-listing of the country’s debut sovereign bond that is currently listed on the Irish Stock Exchange (ISE).
Deputy President William Ruto yesterday told an investment conference that the move would allow more Kenyans to have access to the Eurobond.

“I’m happy now that the stock exchange in Kenya is prepared to work with us as Government to have dual-listing so that Kenyans can have access to the bond,” Ruto told a meeting of African Securities Exchanges in Mombasa yesterday.

Former NSE boss Peter Mwangi said in September 2014 that trading of bonds that are denominated in different currencies would be made possible by introducing a bond trading system that allows reporting of bond prices by yield.

“Steady progress is being made to introduce the bond trading system, which will allow reporting of bond prices by yield. The new system will also allow the trading of bonds denominated in different currencies,” he explained.

Under the new system it would be much easier for investors to compare the pricing of listed debt securities.

It is argued that positive sentiments about the economy whose size has grown by 25 per cent to $55.2 billion after rebasing and the prospects of stable macroeconomic conditions have aroused a sense of excitement in the debt market.

As a result, bonds craze appear to be taking centre-stage on the NSE, providing a rare opportunity for investors and dealers to cash in on bond yields to boost their earnings. A sudden rise in bond issuers, public and private sectors, have elicited overwhelming interest in the debt instruments. It is argued that the flourishing middle class and an increase in cash in circulation, as a result of the Government’s increased spending on development projects, goods and services have made the bond market a viable investment destination.

The increased investment in debt securities is also informed by upbeat prospects of an economic turnaround and the mere fact that bonds provide cheaper funding option for firms.

“The economy is getting vibrant and the cheapest way of raising funds is through the bond market,” said James Wangunyu, managing director, Standard Investment Bank.

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Sovereign bond NSE