SIB, which offers offshore trading services to clients through its Mansa-X platform, said the Eurobond trading desk would also allow clients to trade in sovereign bonds issued by other African countries such as Ghana and Angola.
Kenya has issued four Eurobonds since 2014, which trade in the secondary market at the London and Irish stock exchanges.
Kenyans can now invest and trade in Eurobonds issued by the government through a new desk established by Standard Investment Bank (SIB).
SIB, which offers offshore trading services to clients through its Mansa-X platform, said the Eurobond trading desk would also allow clients to trade in sovereign bonds issued by other African countries such as Ghana and Angola.
Kenya has issued four Eurobonds since 2014, which trade in the secondary market at the London and Irish stock exchanges. Secondary market trading allows investors to buy the bonds from those who had purchased the securities earlier and earn interest besides having the option of selling them.
The dollar-denominated Kenyan bonds carry coupon rates of between 6.87 percent and 8.25 percent, which is well above the average rate of less than two percent that most commercial banks offer on dollar deposits locally.
“The desk has been operational for seven months now, during which we have been able to offer our clients the sharpest prices across all sub-Saharan Africa Eurobonds,” said Martin Kirimi, a sovereign debt analyst at SIB.
“We leverage our vast pool of global counterparties, allowing us to quickly find corresponding buyers and sellers for African Eurobonds, and execute large volume trades.”
The Eurobond market has largely been out of reach as an asset class for ordinary investors from Kenya due to a lack of access to the London and Dublin markets, given the tedious process of finding an intermediary to conduct trades.
Offshore investments have increasingly become an attractive option for investors and institutions looking to diversify their portfolios away from local asset classes such as equities at the Nairobi Securities Exchange and property, which have been offering low returns in recent years.
“An exposure in Eurobonds spreads out investment risks, hence providing portfolio managers with an additional diversification strategy,” said SIB.
Pension funds have, for instance, increased investments in offshore markets threefold in the past two years, raising their portfolio from Sh6.32 billion in 2019 to Sh19.4 billion at the end of last year.
Kenya is expected to keep issuing more Eurobonds in the coming years to redeem existing obligations besides additional borrowing to fund the budget deficit.
