Nairobi Securities Exchange eyes trading of multi-currency bonds

NAIROBI, KENYA: Plans are underway to introduce trading of multi-currency denominated bonds on the Nairobi Securities Exchange (NSE).

The move would pave the way for the Government's $2 billion (Sh176 billion) sovereign bond currently listed on the Irish Securities Exchange to be cross-listed on the NSE.

The out-going Chief Executive Peter Mwangi Wednesday said trading of bonds that are denominated in different currencies would be made possible by introducing a bond trading system that allows reporting of bond prices by yield.

"Steady progress is being made to introduce the bond trading system, which will allow reporting of bond prices by yield. The new system will also allow the trading of bonds denominated in different currencies," he said.

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He was speaking during the ceremony to mark the listing and subsequent trading of the NIC Bank's Sh5.5 billion bond issue yesterday.

Mwangi said under the new system it would be much easier for investors to compare the pricing of listed debt securities.

"Decision making will be faster and this should spur further liquidity in the bond market," he said, adding that increased liquidity would boost investor appetite for debt securities list on the Exchange.

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NIC listed the first Tranche of Sh.5.5 billion bonds under its Sh 8 billion Subordinated Medium Term Note (MTN) Programme.

"The NIC Bank subordinated MTN shows the growing popularity of listed, corporate debt as a source of funding for Kenyan companies," explained Mwangi.

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The proceeds of the bond issue would be used to support the bank's strategy to grow its corporate client base as well as enhance its branch channels to reach more retail and Small and Medium-Sized Enterprise (SME) customers.

The issue that was launched in mid-August 2014 received offers amounting to Sh6.5 billion.

The bond issue was up-scaled to Sh5.5 billion from the original Sh3 billion target.

"The Bond's success is a vote of confidence on the bank's long-term growth strategy. The money will go towards strengthening our capital base so as to support growth in our loan book," said NIC Bank's managing director John Gachora.

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