The early repayment of the Kes 6 billion East African Breweries bond will send the Nairobi Securities Exchange fixed income market to a multiyear low of Sh11.1 billion.
Kenya’s corporate debt market currently is a Kes 11.1 billion portfolio issued by five companies compared to August 2014 when there were 28 listings with a combined value of Kes 71.28 billion.
The year started with Kes 19.1 billion corporate bonds but in April, Family Bank fully settled the interest and principal of its Kes 2.019 billion medium-term note that it borrowed five years ago to finance growth.
Regional brewer East African Breweries Limited (EABL) is now exiting the segment, hiving off Kes 6 billion from the bond market.
Some of the other issues are fairly dormant including the Kes 4.8 billion Chase Bank bond, which was suspended when the lender was placed under receivership and the Kes 1.3 billion Real People bond that remains in abeyance after the troubled firm failed to pay when the bonds fell due.
The decline will significantly affect the attractiveness of the Nairobi Securities Exchange (NSE) corporate bond market which has policy makers struggling to revive it.
The NSE has been trying to rev up the market including signing up Refinitiv in February, this year, to integrate its bond system with Refinitiv’s fixed income call outs application for price discovery and transparency.
The listing of the Sh2 billion Acorn green bond in 2019 and the Kes 3 billion Centum bond this year was seen as a turnaround of the market fortunes.
The Capital Markets Authority (CMA) had initially approved a Kes 4 billion bond with a green shoe of Kes 2 billion for Centum Plc to finance its housing projects through its subsidiary, Centum Real Estate Limited, but only managed to raise half the target amount.
“The success of this bond issuance signals a recovery of the corporate bond market as well as giving a clear indication of the depth of the capital markets as a good avenue to fund well-structured and innovative instruments,” CMA policy and strategy director Luke Ombara said
The NSE is now eying a return of Family Bank, which has received formal approval from the CMA to raise up to Kes 8 billion to strengthen its capital base and support lending.
The Nairobi bourse is also hoping to get county governments to spruce up the bond market scene with news that Laikipia County is on course to making history with the proposed floating of a Kes 1.4 billion infrastructure bond in the stock market to fund capital-intensive development projects in the county such as infrastructure, smart towns and irrigation including reticulation, serviced industrial parks and hospitals.