Nairobi bourse bonds trading surges in 2016

Bonds trading at the Nairobi Securities Exchange (NSE) hit a new high in 2016 as investors switched to the securities following a never-ending bear-run at the equities' market, which has eroded 1.45 billion U.S. dollars of investors' wealth in stocks this year.

Turnover at the secondary market, new data from the NSE showed Friday, will surpass last year's 3.02 billion U.S. dollars by a significant margin.

As at October, according to the NSE, bonds turnover stood at 3.7 billion dollars, an indication that it would cross the 4 billion dollars mark.

The NSE data pointed to a good year for investors at the secondary market, with the highest bonds turnover in the months being recorded in March.

During the month, bonds worth 667 million dollars were traded, while July marked the lowest transaction of 200 million dollars. Turnover at the bourse rose to as high as 39 million dollars a day this year.

In 2015, the highest turnover was recorded in October at 290 million dollars, according to NSE data, and the lowest in June at 120 million dollars.

The number of deals this year similarly hit a high of 908 a month as at October while in 2015, the highest was recorded as 543.

Yields on the bonds ranged between 11 and 14 percent, which are higher than even those at the debt market, adding to the securities' appeal. The yield curve has exhibited an increasing upward trend, especially for one to five years tenure securities.

According to analysts, turnover at bond market would have been higher. However, frequent tap sales by the government make it difficult for the active bond traders, who usually buy in the primary market and sell in the secondary market, to make returns given the lower demand in the former as a result of investors participating in the tap sales. Endit