Capital Markets

Bond turnover at NSE dips 21pc on interest rate jitters

A Nairobi Securities Exchange (NSE) staff monitors electronic trade. FILE PHOTO | NMG
A Nairobi Securities Exchange (NSE) staff monitors electronic trade. FILE PHOTO | NMG 

The turnover in the secondary bonds market at the Nairobi Securities Exchange (NSE) dipped by 21.5 per cent in February compared to January, as investors pumped capital into the primary market of Treasury bills amid uncertainty over the interest rate climate.

Market data shows the bonds turnover in February stood at Sh23.4 billion, compared to Sh29.8 billion in January.

Investors have been showing a preference for short-term primary securities as they wait to ride out the period of uncertainty over interest rates.

The governments need to borrow from the domestic market, which would normally exert upward pressure on rates, has met with central bank’s determination to keep to the yield curve by rejecting high price bids.

“The secondary bonds market recorded reduced activity, with turnover decreasing by 21.5 per cent to Sh23.4 billion in February, despite the yields on government securities remaining relatively flat during the month,” said Cytonn investments in a monthly markets summary for February.

“February was characterised by high Treasury bill subscriptions, with the overall subscription rate increasing to 177.5 per cent, from 68.5 per cent in January.”

Although it recorded a decline in February, the bonds market was still higher in turnover compared to the same period in 2016.

The turnover for January and February—at Sh53.2 billion—was 14 per cent higher than the Sh46.6 billion recorded over the first two months of last year