Kenya opens domestic bond market to global funds

Kenya has opened its domestic bond market to global funds, marking a significant step in the country’s efforts to integrate domestic debt market with global capital flows.

This is after the Central Bank of Kenya and Clearstream, Deutsche Börse Group's post-trade business, unveiled a market link that will give international institutional investors direct access to Kenya's government securities.

The Clearstream-Kenya Link, which goes live today, connects the firm’s global network to the DhowCSD, Kenya's central securities depository, through an omnibus account structure.

The arrangement allows Clearstream's clients to settle and safe-keep Kenyan government bonds, infrastructure bonds, and Treasury Bills without requiring individual local registration or account opening with the CBK.

Standard Chartered Kenya will serve as Clearstream's cash correspondent bank for Kenyan Shilling transactions and as local custodian.

Kenya becomes Clearstream's 60th domestic market link globally and the second in Africa after South Africa.

Clearstream is one of two world-leading International Central Securities Depositories, alongside Euroclear, and currently holds around €19 trillion in assets under custody across more than 2,500 clients in 110 countries.

The country’s local debt market is gaining momentum, with the government expected to borrow at least Sh1.15 trillion to fill the budget deficit in the financial year starting July 1.

The deficit will be financed largely through Sh1.03 trillion in net domestic borrowing and only Sh116.2 billion in external borrowing, signalling a sharp pivot away from foreign debt.

Meanwhile, the Treasury bill auction of June 25, received bids totalling Sh28.1 billion against an advertised amount of Sh2 billion, representing a performance of 116.9 per cent.

Interest rate on the 91-day, 182-day and 364-day Treasury Bills increased marginally.

The tap sale of 20-year and 25-year Treasury bonds received bids totalling Sh31 billion against an advertised amount of Sh20 billion, representing a performance of 155.1 per cent.

In the capital markets, Family Bank’s share extended its bullishness days after launch, with its share price gaining close to 10 per cent to close the week at Sh24.50.

The lender listed at the Nairobi Securities Exchange (NSE) on Tuesday at an offer rate of Sh18.

The banking sector counters continue to attract investors, with I&M, KCB, and Cooperative Bank Group commanding the top gainer’s list for the week.

The NASI, NSE 25 and NSE 20 share price indices increased by 2.24 per cent, 2.42 per cent and 2.81 per cent, respectively, during the week ending June 25.

Market capitalisation, total shares traded and equity turnover also increased by 3.46 per cent, 18.33 per cent and 39.8 per cent, respectively