Money Markets
T-Bill records low sale as investors seek better options
Prime Minister Raila Odinga rings the bell to start trading of the KenGen bond on November 9, 2009. Investors’ drive towards long-term bonds is from expectations that prices of the assets will appreciate as the government pushes for lower interest rates. Photo/FREDRICK ONYANGO
Posted Wednesday, February 24 2010 at 00:00
An analyst with a local bank who wished not to be named said that the main variable was the type of investor.
Bonds being long-term are preferred by local individual and institutional investors who are long term investors, different from stocks whose main investors were foreign and their outlook was short term.
Spurred activity in the bonds market has not created competition for funds between this dent market and the equity market given that majority of investors who are picking up stocks are foreign while bonds are being bought by local investors
Safaricom for instance has been contributing approximately 80 per cent of trading traffic and the main buyers and sellers are foreign investors. KCB which has also seen its shares pick up is also being exchanged by foreign hands.
If history is a tool to measure local investor appetite, analysts agree that the bond will be successful.
The Central Bank of Kenya successfully raised Sh18.4bn as the first tranche and the second tranche will be used for road, flood control and irrigation projects and tapping into geothermal resources.
The Sh26 billion KenGen public infrastructure bond offer of 2009 managed to be oversubscribed by Sh1.6 billion which indicated the appetite for immediate-term bond offers.
Today is the deadline for applications for the bond fated March 1 2010
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