Investors’ demand for utility bonds exceeds supply

The proceeds will be utilised as follows such that Sh3.5 billion (or 24.14 per cent) towards arid and semi-arid areas (ASAL) flood control and irrigation, Sh8 billion (or 55.17 per cent) towards ongoing construction of new roads, overhaul of civil works and purchase of plant equipment; and Sh3 billion (or 20.69 per cent) to finance ongoing projects in Geothermal Resources Exploration and Rural Electrification in the Energy sector.

Because of the demand for fixed-income instruments, their prices has shot up thereby pressuring down returns as interest rates on upcoming issues progressively move downwards.

In a research note of last week, Faida Investment Bank revealed that the bond market was experiencing vibrant trading in the longer-term bonds drawing attention to the fact that the benchmark 15-year bond turning over Sh3.4 billion ($44 million) against Sh2.7 billion ($34 million) the previous week, representing a 26 per cent rise.