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The East African : November 25th 2013
The EastAfrican 50 BONDS WEEKLY STATISTICS 22-Nov-2013 GOVERNMENT OF KENYA FIXED RATE TREASURY BONDS Issue No. TWO YEAR BONDS FXD 4/2011/2Yr FXD 1/2012/2Yr FXD 2/2012/2Yr FXD 3/2012/2Yr FXD 4/2012/2Yr FXD 1/2013/2Yr FXD 2/2013/2Yr FXD 3/2013/2Yr FIVE YEAR BONDS FXD 1/2009/5Yr FXD 1/2010/5Yr FXD 2/2010/5Yr FXD 1/2011/5Yr FXD 1/2012/5Yr FXD 1/2013/5Yr FXD 2/2013/5Yr SEVEN YEAR BONDS FXD 2/2006/7Yr FXD 1/2007/7Yr EIGHT YEAR BONDS FXD1/2006/8Yr FXD1/2007/8Yr NINE YEAR BONDS FXD 1/2006/9Yr TEN YEAR BONDS FXD 1/2006/10Yr FXD 2/2006/10Yr FXD 1/2007/10Yr FXD 1/2008/10Yr FXD 2/2008/10Yr FXD 3/2008/10Yr FXD 1/2009/10Yr FXD 1/2010/10Yr FXD 2/2010/10Yr FXD 1/2012/10Yr FXD 1/2013/10Yr ELEVEN YEAR BONDS FXD1/2006/11Yr TWELVE YEAR BONDS FXD1/2006/12Yr FXD1/2007/12Yr FIFTEEN YEAR BONDS FXD1/2007/15Yr FXD2/2007/15Yr FXD3/2007/15Yr FXD1/2008/15Yr FXD1/2009/15Yr FXD1/2010/15Yr FXD2/2010/15Yr FXD1/2012/15Yr FXD1/2013/15Yr FXD2/2013/15Yr TWENTY YEAR BOND FXD1/2008/20Yr FXD1/2011/20Yr FXD1/2012/20Yr Issue Date Maturity Date Issued Value in millions Coupon (%) Traded yield (%) Previous Price (%) Total Value traded (kshs) MARKETS NOVEMBER 23-29,2013 LONG-TERM INVESTMENT 28-Nov-11 30-Apr-12 27-Aug-12 29-Oct-12 24-Dec-12 25-Feb-13 25-Mar-13 26-Aug-13 21-Sep-09 24-May-10 30-Nov-10 31-Jan-11 28-Jan-13 29-Apr-13 1-Jul-13 25-Dec-06 30-Jul-07 27-Feb-06 26-Feb-07 24-Apr-06 27-Mar-06 25-Nov-13 23,428.25 28-Apr-14 25-Aug-14 6,418.05 16,312.35 27-Oct-14 13,786.50 22-Dec-14 20,777.16 23-Feb-15 20,468.11 23-Mar-15 24-Aug-15 19,967.33 17,927.92 15-Sep-14 18-May-15 23-Nov-15 13,239.10 3,060.25 14,929.20 25-Jan-16 22,083.10 22-May-17 17,687.98 23-Apr-18 20,165.56 25-Jun-18 12,888.00 16-Dec-13 21-Jul-14 17-Feb-14 16-Feb-15 13-Apr-15 14-Mar-16 29-May-06 16-May-16 29-Oct-07 29-Oct-07 28-Jul-08 29-Sep-08 27-Sep-09 26-Apr-10 1-Nov-10 16-Oct-17 16-Oct-17 16-Jul-18 28-Sep-18 15-Apr-19 25-Mar-13 26-Aug-13 25-Sep-06 28-Aug-06 28-May-07 26-Mar-07 25-Jun-07 26-Nov-07 31-Mar-08 26-Oct-09 29-Mar-10 25-Apr-11 24-Sep-12 29-Jul-13 29-Apr-13 30-Jun-08 30-May-11 27-May-13 TWENTY FIVE YEAR BOND FXD1/2010/25Yr THIRTY YEAR BOND SDB 1/2011/30Yr 2,317.95 8,269.85 3,318.80 13,764.30 2,656.90 3,451.05 5,028.10 9,308.80 2,992.75 13,504.70 4,151.80 4,966.85 13-Apr-20 19,394.15 19-Oct-20 18,849.90 13-Jun-22 10,520.46 19-Jun-23 526.69 11-Sep-17 13-Aug-18 13-May-19 7-Mar-22 6-Jun-22 4,031.40 3,900.95 4,864.60 3,654.60 7,236.95 7-Nov-22 18,030.20 13-Mar-23 7-Oct-24 10-Mar-25 8-Dec-25 6-Sep-27 7-Feb-28 10-Apr-28 7,830.90 9,420.45 10,206.45 13,513.10 21,089.45 6,337.38 15,646.23 5-Jun-28 20,360.35 5-May-31 1-Nov-32 22.844 13.826 11.114 12.496 12.382 12.844 12.940 12.939 9.5000 6.9510 6.6710 7.6360 11.8550 12.8920 11.3050 12.0000 9.7500 13.2500 12.7500 13.5000 14.0000 14.0000 10.7500 10.7500 10.7500 10.7500 10.7500 8.7900 9.3070 12.7050 12.3710 13.7500 14.0000 13.0000 14.5000 13.5000 12.5000 12.5000 12.5000 10.2500 9.0000 11.0000 11.2500 12.0000 9,365.80 4,389.35 28-Jun-10 28-May-35 20,192.50 28-Feb-11 21-Jan-41 22,136.45 13.7500 10.0000 12.3500 11.2500 12.0000 13.5000 100.3293 107.4578 100.2844 101.4593 101.4309 101.8645 102.2033 102.8681 98.7918 92.6968 90.9304 92.1489 105.2006 104.0408 99.2764 100.5598 98.4657 102.7421 100.8097 100.8356 105.0239 104.9510 87.7671 96.2461 90.6357 96.8658 94.6174 85.8422 87.0802 99.7925 102.0533 106.4235 108.5958 99.9512 112.9421 106.7821 102.6993 100.7864 99.9849 76.5819 78.4434 13.3000 11.0000 99.9665 200,000,000 88.4360 100,000,000 93.2300 102.3056 76.6763 89.8104 82.5120 86.9394 400,000 According to the Bank of Uganda, the bond’s coupon rate will be determined at the auction. Pic: File Uganda 15-year bond up for auction on Dec 4 This is welcome news fo≥ investo≥s keen on longe≥ te≥m debt inst≥uments By BERNARD BUSUULWA The EastAfrican A fter nearly two years of waiting, Uganda’s 15-year Treasury bond is scheduled for its pioneer auction on December 4. The development, which is expected to bring down interest payments incurred by government through increased focus on long term bonds, is good news for investors who have been eyeing longer term debt instruments. The bond is valued at Ush80 billion ($31.6 million) but its coupon rate is to be determined during the auction, according to the Bank of Uganda (BoU), reflecting uncertainty over its benchmark price. The 15-year bond is ex- pected to cater for the government’s huge domestic borrowing needs this financial year, estimated at Ush1,040 billion ($411 million) while minimising the interest burden that has surged in recent years due to massive flotation of short-term Treasury bills in 2011/12. Long term bonds bear lower interest costs while investors enjoy higher returns pegged to low and stable inflation rates. Total interest payments in- curred on domestic debt rose from Ush435 billion ($171.9 million) in 2010/11 to roughly Ush800 billion ($316 million) in 2012/13, according to the Ministry of Finance, Planning and Economic Development. “This auction will help meet some of government funding requirements in the domestic market. I expect more local participation than foreign interest in this auction due to its relatively small size. But I cannot confirm plans for issuing the seven year bond,” said Stephen Mulema, BoU director for financial markets. Analysts are seemingly upbeat about the debut auction but worries about future market liquidity have also emerged. Shy commercial banks “The National Social Se- curity Fund is most likely to take up much of the 15-year Treasury bond because many of the commercial banks lack mandates for investing in debt securities that are longer than 10 years. Longer term paper usually provides government with cheaper borrowing options and more attractive returns for investors over the long term,” explained a financial trader at Stanbic Bank Uganda who requested anonymity. “Provision of an auction calendar has made it easier for investors to absorb such securities without inconven- ience. But too much reliance on a few institutional investors kills liquidity. Such investors tend to buy and hold rather than to trade,” noted Stephen Kaboyo, a financial analyst and forex dealer. Entry of the 15-year bond offers much needed relief to large institutional investors like NSSF, that have in the past sought longer term securities to match growing portfolios of long-term savings so as to maximise returns on investment. More diversification into long-term securities among these investors helps increase returns on investment by linking long-term savings to long-term assets that yield more over a longer period. This instrument also pro- vides a more reliable pricing tool for mortgage players that offer products of 15-20 years, leading to less complex valuation of mortgage rates and risk exposure. However, lack of clarity over issuance of a seven-year bond that was similarly scheduled for 2011 has provoked doubts among market players over its fate. Investors uncomfortable with the five-year and 10-year Treasury bonds have found themselves without choices while issuers of corporate bonds have been forced to improvise pricing tools for lack of a suitable yield curve. Most issuers of corporate debt prefer a seven-year duration, which fits easily into their business and financial forecasts.
November 18th 2013
December 2nd 2013