Lucrative trade in bonds sparks turf wars and staff flight

Increased trading in bonds has sparked staff movements with an investment bank losing nearly a whole department that specialises in securities.

Faida Investment Bank (FIB) has been on the receiving end lately, losing five staffers including department head, Anthony Munyiri, and his deputy, Laban Githuki, following their sterling performance that saw the firm become one of the leading traders in terms of share of total turnover.

Earlier, experienced bond market trader and analyst Mr Victor Nkiiri had moved from Sterling Investment Bank to CFC Financial Services.

The number of bond market professionals in terms of trading and analysis are not many, causing broker and investment banks to compete and poach the available few.

“If you are looking to recruit staff to do bond dealing and analysis you are likely to get five or six applications. The market is a bit tight as competent bond traders and analysts are a select few,” ABC Capital CEO, Mr Fred Maina, said in a recent interview.

ABC Capital started a bonds desk last August.

Trading desks

Some brokers still do not have bond trading desks.

As at the end of February, secondary market turnover was Sh42 billion against Sh27 billion for January.

The February bond turnover was the highest ever reached in a month in the history of the bourse.

“We could reach Sh90 billion turnover in the secondary bond market by the end of first quarter of the year and probably more than Sh300 billion by the end of the year,” said Mr Nkiiri.

Last December, bond turnover was Sh16 billion which was more than double the December 2008 figure of Sh7 billion.

In fact, the fixed-income market grew in the course of 2008 to the extent that trades in single months were higher than those done in comparative months in the previous years.

Standard Investment Bank executive director, Mr Job Kihumba, said that any further growth in the market could cause scarcity of bond dealer analysts.

“If the bond market becomes very vibrant, we are likely to experience a shortage of staff who can do dealing and analysis. And bond pricing is the basic issue,” he said.