Bond turnover hits Sh494bn as investors cash in on high returns

There is encouragement for investors in the bond market with 81% of the bonds issued having recorded a positive return in 2014 last year. The bond turnover rose by 9.1 per cent last year to Sh494 billion with returns rising for most of the issues. In 2013, the bonds turnover had stood at Sh453 billion which was a drop from the previous year. According to Nairobi-based Kestrel Capital (East Africa), this marks the second best year ever since 2012 where Sh567 billion was traded making it the highest ever in history. Bond returns are calculated yearly from changes in price in addition to coupon payments given in the course of the year. These coupon payments are made twice in an year for Kenyan bonds. The increased activity in the bond market is attributed to an expectation lower interest rates or yields. It is expected that the bond market will experience a high turnover in 2015 if interest rates are as low as the market expects [...]

Centum hires expert for UAP deal tax advice

NSE-listed investment firm Centum and Billionaire investor Chris Kirubi have hired a consultant to help establish the capital gains tax payable on their combined sale of shares in UAP Holdings worth Sh8.8 billion. Both parties have sold their shares of 13.75 per cent and 9.58 per cent stakes respectively to Old Mutual Holdings at a time when the government has reinstated the capital gains tax at a rate of five per cent. The effective purchase price of UAP shares by Mr Kirubi and Centum could be the issue of contention since both who acquired their shares over more than a decade increased their stakes at different times over this period. The tax consultant is expected to agree with KRA on the purchase price that will be applicable for purposes of calculation of the capital gains tax payable [...].

Kenya Power takes a new Sh14bn loan

The electricity retailer has acquired from the African Finance Corporation (AFC) a Sh2.28 billion loan ($25 million). This loan forms part of the Sh13.66 billion unsecured syndicated loan to Kenya Power. These funds are meant to reduce system losses and improve reliability. This loan facility will also Kenya Power in its plan to increase capacity to 5,000 megawatts capacity from the current 2,000 megawatts by 2020. The electricity retailer is gradually turning to foreign lenders since they can offer larger loans at a lower interest rate. The government has recently secured a Sh45 billion loan from the World Bank to buy off Kenya Power’s commercial loans that are more expensive to service [...]

UK-based firm eyes Kenya oil supply

Anglo Energy Refining Corporation, a UK-based petroleum firm, has set up base in Kenya with an eye on bulk importation of oil and possibly setting up a refinery. The UK firm’s debut makes Nairobi its African headquarters. The oil company which received a license to operate and import oil in December under the Open Tender System (OTS), indicates that it is ready to bid for tenders. All crude and refined oil in Kenya is imported through the OTS and the winning company gets the sole right to buy and resell the commodity to other marketers. Anglo Energy will be competing with Vivo Energy, Gulf, Gapco and Total which are the other companies listed under the OTS. Anglo Energy has refineries in Indonesia and Paraguay and is also involved in upstream business through its oil exploration and production in South East Asia, South America and Russia. The company’s fields have a combined daily output of 13,000 barrels of oil. Even though the OTS business is highly capital-intensive, banks are often willing to lend importers since oil is easily sold ensuring that the lenders are paid on time.

The only refinery at the moment is Kenya Petroleum Refinery facility in Mombasa which is currently dormant after 54 years of service. The Kenyan government has been doing a feasibility study on building of a new refinery in Lamu County as part of the Lamu Port South Sudan-Ethiopia Transport corridor project [...]

Stocks to look out for in 2015

Centum, Kenol Kobil, Equity Bank, Mumias Sugar as well as the cement industry, insurance and Information Technology is a list of firms and sectors that will be the most closely watched this year.

Centum which was engaged in Lamu coal power and Rea Vipingo deals has annouinced recently that ti will acquire a further 3 percent stake in Almasi beverages by investing over Sh100 million. Almasi is a holding company of three Coca-Cola bottling firms - Mount Kenya Bottlers, Rift Valley Bottlers and Kisii Bottlers. The transaction will make Almasi to become a subsidiary of Centum since it will give it control of the Coca-Cola bottlers’ holding company when Centum raises its to 50.95 per cent of the issued share capital of the company after this deal.

Equity Bank is also another company to watch with the introduction of the thin slim SIM cards. The bank has indicated that it will charge a maximum of Sh25 for any amount transacted, a move that could bring about price wars

Oil marketing firm Kenol Kobil is another firm to watch after its slow return to profitability. The firm is expected to benefit from lower international crude prices and not so low pump prices.

In the banking sector, there will be slow but steady growth ambitious banks who can benefit from regional expansion, infrastructure finance, SME lending, and the provision of online and mobile banking.

Banks which are showing a strong growth path are KCB, Equity Bank, NIC Bank and Diamond Trust. National Bank of Kenya which has re-branded will also join this list with its recent recruitment of a new executive team and its recent exercise of clean up and growing of their loan book [...]