Treasury targets Sh20 billion in two bond issues

The two issues which seek to ride on the past success of previous issues are the five- and 20-year bonds. These bonds which total to Sh20 billion will be issued later this month are likely to raise yields and domestic debt level with low maturities expected in the month. The initial five-year bond in April last year targeted Sh15 billion but brought in Sh17.5 billion at a rate of 10.8 per cent. On the other hand, the 20-year Sh12 billion bond first issued in November 2012 brought in Sh30.7 billion through the initial sale and a reopening. In December last month, Central Bank of Kenya also offered 15-year and two-year bonds totaling Sh20 billion. It received bids amounting to Sh13.9 billion at 12.7 per cent for the 15-year bond and Sh13.11 billion at 10.9 per cent for the two-year bond.

The new bonds come as the Treasury cut its target for domestic borrowing on successful reopening of the Eurobond issue in a bid to cut interest rates charged by the commercial banks [...]

Shilling defies CBK liquidity mop-up to drop against dollar

The shilling has defied a multi-billion liquidity mop-up and occasional direct dollar sale by the Central Bank of Kenya (CBK) to continue a declining trend picked last year. Dealers expect the weakening trend to persist, with the currency currently at its lowest level to the dollar since November 2011. In afternoon trading Monday, the shilling had weakened to 91.20/30 to the dollar compared to Friday’s closing average of 91.15. CBK sold an unspecified amount of dollars in the market on Thursday last week as the shilling breached the 91 level.

Some dealers have faulted this move indicating that it has been adding to the volatility by giving the shilling an artificial short-term boost. Contributing factors to this depreciation of the shilling are, for example, a globally strengthening dollar and weakened inflows persist.

Liquidity has been rising in the past two weeks on account of end month government payments, net redemption of government securities and maturity of term auction deposits, meaning the mop-up activity is expected to increase in the coming weeks. The release of Sh10 billion in value added tax refunds by the Treasury starting this week will also serve to increase the liquidity in the market, cranking up pressure on the shilling [...]

Slow trade at NSE extends into second week on marginal gains

The stock market has had a slow start this New Year which has extended into a second week. The only NSE listed companies which traded more than a million shares in the market are Safaricom and Barclays Bank on Monday. The reason may be investors reducing their trading activity as they await a clear way forward on the modalities of levying the five per cent capital gains tax that came into effect on 1^st January this year. Moreover, most local fund managers are compiling their third quarter 2014 reports for filing which could be the reason for their low activity. The week opened with NSE trading 9.7 million shares valued at Sh271 million, a modest increase on the 9.1 million shares worth Sh214 million traded Friday.

Safaricom moved 2.37 million shares at an average price of Sh13.85 and Barclays 1.35 million shares at Sh15.95, with the two counters accounting for 38.4 per cent of the traded volume. On the other hand, agriculture stocks were the most buoyant in price gains, led by Williamson Tea which closed up 10 per cent at Sh275. Kapchorua Tea was up 8.7 per cent to Sh150, and Eaagads up 5.3 per cent to close at Sh39.75. Mumias Sugar also joined the top gainers, up seven per cent to Sh2.30. On the decliners list, Umeme led the market by shedding 9.5 per cent to close at Sh19 while East Africa Portland Cement lost 7.3 per cent to close at Sh51, both on thin volumes of 100 and 1,000 shares respectively. The main NSE 20 Share Index was virtually static, only edging up by a marginal 0.23 points to stand at 5121. The NSE All Share Index (NASI) closed at 162.05 points, compared to Friday 162.08 points.

The market is expected to pick up in the coming week as the January effect continues to ease off easing off and investors regain their confidence in the market [...]

Equity’s part owner Helios raises Sh100bn for continent

Helios, a Pan-African private equity firm, has raised $1.1 billion (Sh100 billion) — one of the largest amounts ever — for an Africa-focused fund. Helios III fund said it had managed to raise $1.1 billion, 10 per cent more than the $1 billion (Sh91 billion) targeted. The firm’s management said over-subscription of the fund was due to demand from institutional investors who want exposure to African companies. The private equity firm invests between $30 million (Sh2.7 billion) and $200 million (Sh18 billion) in each company.

The equity firm is the single-largest shareholder in Equity Bank with almost a quarter of the shareholding. Other investments include a $40 million (Sh3.6 billion) investment in Wananchi Group made in October 2013 and a 40 per cent stake in Vivo Energy made in 2011. The company’s strategy focuses on investing in businesses that lead the provision of core economic infrastructure: de-bottlenecking the economy, increasing efficiencies, and reducing living costs for households and operating costs for businesses [...]