Foreign investors push bond market to new high

Tuesday, February 27th, 2024 00:01 | By
Nairobi Securities Exchange. PHOTO/@NSE_PLC/X

The bond market hit a record high at the Nairobi Securities Exchange (NSE), boosted by foreign investors seeking to cash in as yields on the securities rise.

NSE data released Thursday evening showed that the bond turnover has been on an upward trajectory since Monday to hit a record 44 billion shillings (about $301.8 million) Thursday, the largest single trading in the history of the bourse.

“The bond market has defied expectations, scaling new heights for a third consecutive day with bond turnover of 301.8 million dollars,” NSE said in a statement. On Wednesday, bond turnover reached 283.9 million dollars, compared to 248.9 million dollars on Tuesday, significantly higher than the average of 6.85 million dollars in previous months.

Tax free bond

During the trading, investors went for government infrastructure bonds, in particular an 8.5-year security sold on February 15 in the primary market.

The bond is tax-free, has a shorter tenor of 8.5 years and the yields stand at 18.5 per cent, incentives that made the paper appealing to investors during the primary sale. The paper recorded increased demand from external investors, raising $1.55 billion.

Foreign investors, who have shown renewed interest in Kenya’s bond market, are seeking to cash in on the bond’s higher yields as they go for it in the secondary market.

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