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​Parliamentary Budget and Appropriation Committee Casts Treasury on the Spot over Reliance on Long-term Debt

BY Soko Directory Team · December 23, 2016 07:12 am

Macro Economic

Parliamentary Budget and Appropriation Committee (BAC) has cast Treasury on the spot over its reliance of long-term debt. The Committee is pushing for a balance between short-term debt (less than five years) and long-term debt (above ten years). Treasury’s reliance on long-term debt is guided bythe urge to maintain low loan repayments amidst a rising public debt which hit KES 3.7Tn as at September. Kenya’s annual debt repayment is set to hit KES 618.5Bn in 2017, a 38.5% jump from KES 446.4Bn spent this year.

Kenya is poised to seal a deal paving the way for setting up of KES 3Bn African Export Import Bank (Afreximbank) regional headquarters in Nairobi. The deal, to be signed in the coming days, comes after a 2-year impasse triggered by the government’s delay in granting diplomatic status to the multilateral lender and its staff. The bank has hitherto financed big-tickets deals to the tune of KES 30Bn towards listed firms. Its location in Nairobi is expected to create new quality jobs.

Fixed Income

Market turnover came in at KES 1.87Bn down from KES 3.56Bn posted in the previous trading session, with investors’ appetite still leaning towards bonds on the medium and long end of the yield curve.

Market intervention by CBK for KES10Bn worth of reverse repos for 7 days at 10% is an indication of the skewness in market liquidity; partly due to settlement of tax payments carried out on 20/12/2016.

The tap-sale results came in yesterday evening with the first tranche of the tap-sale receiving total bids of KES13.6Bn against a target of KES 20Bn issued. This is a clear indication of the market appetite for the bonds on short end of the yield curve. The sale period for the second tranche of the tap-sale will commence on 23rd December 2016 to 29th December 2016.

Trading Expectation

As we come to a close of the week, market volumes remain relatively flat.

We expect to see investors taking advantage of the discounted prices on most of the counters on the NSE, particularly East African Breweries Ltd (NSE: EABL) and Safaricom Ltd (NSE: Safaricom)

The announcement by Afreximbank to conclude talks of setting up of its regional Hub in Kenya comes as positive news.The bank finances and promotes intra-and extra-African trade,notable deals with the Kenyan government having contributed to Kenya Airways Ltd (NSE: KQ) and Kenya Power Ltd (NSE: KPLC)

Corporate Event

Kenya Power will hold its AGM on 23rd Dec 2016 as from 11.00am at Safari Park Nairobi.

 

 

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system. Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

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