SIB unveils Eurobond trading for Kenyans

By CHARLES MWANIKI
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Summary

• SIB, which offers offshore trading services to clients through its Mansa-X platform, said the Eurobond trading desk would also allow clients to trade sovereign bonds issued by other African countries such as Ghana and Angola. .
• Kenya has issued four Eurobonds since 2014, which trade on the secondary market of London and Irish stock exchanges.

Kenyans can now invest and trade government-issued Eurobonds through a new office set up by the Standard Investment Bank (SIB).

SIB, which offers offshore trading services to clients through its Mansa-X platform, said the Eurobond trading desk would also allow clients to trade sovereign bonds issued by other African countries such as Ghana and Angola. .

Kenya has issued four Eurobonds since 2014, which trade on the secondary market of London and Irish stock exchanges. Trading in the secondary market allows investors to buy the bonds of those who had purchased the securities earlier and earn interest in addition to having the opportunity to sell them.

Kenyan dollar-denominated bonds carry coupon rates of between 6.87% and 8.25%, which is well above the average rate of less than 2% that most commercial banks locally offer on dollar deposits.

“The office has been operational for seven months now, during which we have been able to offer our clients the most advantageous prices of all Sub-Saharan African Eurobonds,” said Martin Kirimi, sovereign debt analyst at SIB.

“We leverage our large pool of global counterparties, which allows us to quickly find matching buyers and sellers for African Eurobonds and execute high-volume trades.”

The Eurobond market has been largely out of reach as an asset class for ordinary Kenyan investors due to a lack of access to the London and Dublin markets, given the cumbersome process of finding bonds. an intermediary to carry out transactions.

Offshore investments have increasingly become an attractive option for investors and institutions looking to diversify their portfolios away from local asset classes such as shares on the Nairobi Stock Exchange and real estate, which have offered low yields in recent years.

“An exposure to Eurobonds spreads investment risk, providing portfolio managers with an additional diversification strategy,” SIB said.

Pension funds have, for example, tripled their investments in offshore markets over the past two years, growing their portfolio from 6.32 billion shillings in 2019 to 19.4 billion shillings at the end of the year. last.

Kenya is expected to continue issuing more Eurobonds in the coming years to repay existing bonds in addition to additional borrowing to finance the budget deficit.

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