Turnover for the month stood at Sh55.44 billion, the highest since June 2016’s sales of Sh60 billion.
The government has, however been, reluctant to take up expensive money leaving a lot of offers on the table.
Total bond turnover in the five months to May stands at Sh191.1 billion, compared to Sh207.2 billion in the first five months of 2016. Going forward,
Bond turnover at the Nairobi Securities Exchange (NSE) #ticker:NSE rose to an 11-month high in May as investors turned to the secondary market in search of higher fixed income yields.
The money market has been liquid in recent weeks as indicated by the heavy subscriptions on primary treasuries.
The government has, however been, reluctant to take up expensive money leaving a lot of offers on the table. Some of this cash has found its way into the secondary market.
“Heavy liquidity in the market has seen some marginal drop in yields across the curve. This has somewhat revived activity in what has been a dormant secondary bond although the bias remains broadly on the short end of the curve and on the infrastructure bonds,” said Commercial Bank of Africa in a fixed income note.
“With expectations of further downward pressure on yields from the prevailing liquidity, bond traders will continue to look for tradable papers given demand for treasuries remains generally high.”
Yields on the primary government securities sales have been trending downwards, especially on the 91-day Treasury bill, while May’s reopened 10 and 15 year issues fetched a coupon of 12.4 and 13.1 per cent respectively.
Although the turnover on bonds has hit an 11-month high, the cumulative turnover for the year-to-date is still trailing that of a similar period in 2016.
Total bond turnover in the five months to May stands at Sh191.1 billion, compared to Sh207.2 billion in the first five months of 2016. Going forward, activity will be largely determined by appetite for additional domestic debt from the government, which has just about achieved its target of Sh235 billion for the fiscal year.
The performance of the equities market may also be a negative factor, should the recent resurgence in share prices continue.
Investors had been turning capital towards the fixed income market from equities during the worst of the bear run that took root in 2015 but may now start trooping back if share prices keep rising.
