As Kenya’s $2 billion Eurobond approaches maturity, the secondary market witnesses a surge in volatility. Traded on the Irish stock market, the 10-year sovereign bond, launched in June 2014, has experienced weekly yield fluctuations exceeding a percentage point since November. In contrast, other Eurobond issues maturing between 2027 and 2048 have shown more modest movements, ranging from 0.1 to 0.3 percentage points weekly.
Bond prices and yields, known for their inverse relationship, highlight the dynamics of the secondary market where bonds are traded at a premium or discount to their face value.
President William Ruto, in his November 9 State of the Nation address, confirmed the government’s commitment to settling the first $300 million installment of the 2014 bond this month. Following this announcement, the traded yield, which had risen by 1.4 percentage points to 15.46 percent, reversed, falling to 12.9 percent over the next two weeks.
Analysts interpret this decline as a response to increased demand triggered by the buyback announcement, indicating potential profits for participants.
Economist Churchill Ogutu from IC Asset Managers (Mauritius) anticipates a premium for bondholders to participate in the buyback. He draws parallels with a recent similar transaction in Ghana, emphasizing that the buyback, settling over 10 percent of the total bond value, is likely to occur through a tender offer.
Despite uncertainties surrounding the buyback’s finer details and the bond’s susceptibility to short-term emerging and frontier debt sentiments, market sentiment has improved. A recent 1.21 percentage point rise in yield, attributed to growing risk aversion to frontier and emerging bonds amid a globally strengthening dollar, contrasts with the overall positive outlook. The government’s outlined buyback plan and assurances of its ability to service external debt obligations, supported by incoming dollar supply from the World Bank and the International Monetary Fund, contribute to the improved sentiment.
By: Montel Kamau
Serrari Financial Analyst
4th December, 2023
Article and News Disclaimer
The information provided on www.serrarigroup.com is for general informational purposes only. While we strive to keep the information up to date and accurate, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk.
www.serrarigroup.com is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information on the website is provided on an "as-is" basis, with no guarantee of completeness, accuracy, timeliness, or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
In no event will www.serrarigroup.com be liable to you or anyone else for any decision made or action taken in reliance on the information provided on the website or for any consequential, special, or similar damages, even if advised of the possibility of such damages.
The articles, news, and information presented on www.serrarigroup.com reflect the opinions of the respective authors and contributors and do not necessarily represent the views of the website or its management. Any views or opinions expressed are solely those of the individual authors and do not represent the website's views or opinions as a whole.
The content on www.serrarigroup.com may include links to external websites, which are provided for convenience and informational purposes only. We have no control over the nature, content, and availability of those sites. The inclusion of any links does not necessarily imply a recommendation or endorsement of the views expressed within them.
Every effort is made to keep the website up and running smoothly. However, www.serrarigroup.com takes no responsibility for, and will not be liable for, the website being temporarily unavailable due to technical issues beyond our control.
Please note that laws, regulations, and information can change rapidly, and we advise you to conduct further research and seek professional advice when necessary.
By using www.serrarigroup.com, you agree to this disclaimer and its terms. If you do not agree with this disclaimer, please do not use the website.
www.serrarigroup.com, reserves the right to update, modify, or remove any part of this disclaimer without prior notice. It is your responsibility to review this disclaimer periodically for changes.
Serrari Group 2023
