Secondary Market Turnover and Interbank Rate Declines

By Soko Directory Team / Published February 19, 2018 | 9:56 am

Secondary market turnover declined 28.50 percent on a week-to-week basis to 13.36 billion shillings.

The subdued performance was attributed to the ongoing February primary issue whose sale will run through Tuesday.

The top five traded bonds accounted for 58.04 percent of the total trading activity with the January bond issue – IFB1/2018/15 – recording the highest turnover.

The yield on the infrastructure bond (IFB) paper has dropped 40bps to average 12.00 percent at weekend.

“We are of the view that secondary turnover will narrow slightly in the week due to the ongoing primary sale. Lately, global rating agencies have issued rating actions on Government of Kenya,” said analysts from Genghis Capital.

Fitch Ratings revised the outlook on Kenya’s Issuer Debt Rating to Stable from Negative; reflective of a stability in public debt/GDP coupled with rebound in 2018 economic growth.

S&P assigned a ‘B+’ long-term issuer rating to the proposed international sovereign bond(s) whose details still remain sketchy.

On the other hand, Moody’s downgraded the issuer rating from B1 to B2 citing an erosion of fiscal strength together with rising government liquidity risk.

“We believe the ongoing Eurobond roadshows factored the ratings of the previous two agencies – both at B+; whose credit ratings were opted in the 2014 Eurobond prospectus. We do not foresee the Moody’s downgrade posing a material effect on the upcoming international sovereign bond issue,” said Genghis Capital.

The average interbank rate declined 63bps to 4.71 percent in the week. However, the rate edged up on Friday which was attributed to a shift into the new CRR cycle. Interbank volumes declined by 10.49B billion shillings to settle at 71.70 billion shillings.

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