CMA policy and strategy director Luke Ombara during a roundtable briefing in Nairobi on November 14,2017. Photo/Enos Teche. Bond turnover at the Nairobi Securities Exchange hit an all-time high of Sh691.76 billion in 2020, according to a Capital Markets Authority report.
The fourth quarter Capital Markets Soundness Report says the demand was boosted by appetite for government securities.
It shows domestic institutional investors increased their allocation to Treasury bonds as they sought stable returns amidst increased volatility in other securities during times of uncertainty.
Even so, the high demand in the bond market resulted in a significant drop in yields.
The report shows 90-day T-bills had a yield of 6.93 per cent , yields on 182-day T-bills stood at 7.40 per cent, while the yield on the 364-day T-bill stood at 8.34per cent in the week ended December 24, 2020. This was a drop of between 20 to 40 basis points compared to returns in the corresponding quarter the previous year.
While Treasury bonds turnover went up almost Sh40 billion from Sh651.35 billion in 2019 to Sh690.58 billion, corporate bond registered dismal results, with the turnover dropping by more than 50 per cent to Sh1.18billion compared to Sh3.7 billion.
Local corporate bond investors were the leading investors in corporate bonds at 80.91 per cent of the total share quantity and the balance of 19.09% being fully attributed to foreign investors.
During the last quarter of 2020, CMA granted approval to Centum Real Estate Limited (Centum Re) to issue secured zero-coupon and secured zero-coupon equity-linked Medium-Term Notes of Sh4 billion, with a greenshoe option (selling of more shares that initially offered) of Sh2 billion.
The offer, a restricted issue, targeted sophisticated investors who are sufficiently versed with the risks associated with the notes.
The securities market experienced a sustained drop in prices (bear run)as investors remained uncertain about the future of most trading companies that had largely cut operations due to Covid-19. ”Despite the depressed performance witnessed in 2020, the rally observed in the quarter under review portends a better year ahead, as we forge in resilience,” Ombara said. The NSE 20 benchmark index dropped by 29.61 per cent, closing the year at 1,868.39 points compared to 2,654 .39 in 2019.
It hit a 10-year low in March, moments after the country announced its first coronavirus case, shedding off 161.91 points (6.5per cent ) to close the day at 2337.03 points.According to CMA, the rich index closed the year at […]
