CfC Stanbic sees a rise in corporate bond issuance

Standard Bank of South Africa majority-owned CfC Stanbic expects an increase in corporate bond issues in the coming year.

The bank projects an increase from this year’s issuance of about Sh14 billion, which is lower than previous year figure of Sh30 billion.

Among the largest issues in the year was that of East Africa Breweries bond of about Sh5 billion ($50 million).

The company said it saw room for corporate bonds coming to the market given the current liquidity levels that has seen several government securities oversubscribed in recent times.

“There is a lot of liquidity in East Africa and we believe you will still see, if not the same number of corporates, a higher number of corporate issuers in 2016,” said Wegoki Mugeni, CfC Stanbic Bank head of debt capital markets (East Africa).

She said the market had been adversely affected by the high interest rates necessitated by the need to curb the depreciation of the shilling.

Ms Mugeni noted the Kenyan interest rates had started the year at low levels before changing for the worse and affecting issuance.

“The interest rate environment then changed in response to the strengthening of the dollar and interest rates moved up quite dramatically across the East African region,” she said in the statement.

Interest rates have started coming down with the rates on Treasury bill falling by more than half.