Summary
- Analysts said the fall is also an indication of the macroeconomic stability of the country in recent times, even as they pointed out that the prices are still below 100 units that amount to discount.
- For Kenyan high net worth individuals and institutions, the attraction of the Eurobond would be in the protection against swings in the value of the local unit.
Yields on Kenyan Eurobonds further fell in the past week to
continue a trend charted since the beginning of the year, showing that
the demand for the instruments has risen during the period.
Analysts
said the fall is also an indication of the macroeconomic stability of
the country in recent times, even as they pointed out that the prices
are still below 100 units that amount to discount.
For
Kenyan high net worth individuals and institutions, the attraction of
the Eurobond would be in the protection against swings in the value of
the local unit.
“With the risk in the local currency, high net worth
individuals, for example, would benefit from holding Eurobond as a way
to protect themselves against that risk,” said Edwin Chui, research
analyst with Dyer & Blair Investment Bank.
“The
bonds are also still at prices below 100 meaning they are at a discount
and people can buy them. So they are in demand. The market is also
digesting what a new Eurobond issue means,” said Mr Chui.
For
the five-year bond that is due for redemption in June, the yield stood
at an average of 4.569 percent for the week that ended on January 24
compared to 4.646 per cent in the previous week.
For
the 10-year bond due for repayment in 2024, the yield was at an average
of 7.006 percent for the week relative to the 7.444 percent of the
previous week.
The other 10-year bond was floated early
last year and is to be redeemed in 2028, the yield fell to 7.632
percent from 8.135 percent average of the week that ended on January 17.
This is the Eurobond issue that had the biggest one-week
downward change — amounting to 0.503 percent — among the four listed
ones.
The 30-year bond due for repayment in 2048 saw
its yield fall to 8.762 percent on average compared to 9.097 percent in
the previous week.
The changes in yields on the bonds
is even bigger considering the current ones and the peak levels in 2016,
an analysis by Cytonn Investments shows.
“Since the
mid-January 2016 peak, yields on the Kenyan Eurobonds have declined by
2.6 per cent points and 4.7 per cent points for the 10-year and 5-year
Eurobonds, respectively, an indication of the relatively stable
macroeconomic conditions in the country,” said Cytonn.
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