CMA seeks foreign currency use for bond purchase
2 months ago, 11 Oct 23:37
Kenya is planning to allow the use of foreign currencies in the local bond market, a Capital Markets Authority official has said.
This will not only boost uptake of products offered at the Nairobi Securities Exchange by foreign investors, but may create a leeway for Kenyans living abroad to invest in the capital markets with much more ease.
Products offered at the NSE are currently only offered in Kenyan Shillings.
“When you issue, say, a Dollar denominated bond, you will expect more than 78 per cent will be foreign investors so we are looking at attracting foreign capital,” assistant manager for strategy and policy at CMA Jairus Muaka said.
During a policy roundtable forum held yesterday, Muaka said the proposal to have foreigners trade with local bonds using their home currency was introduced in November last year and was still being reviewed by the Central Bank of Kenya to fully understand its impact to the economy.
“Central Bank is still reviewing what impact adjusting the payment system to accommodate foreign currencies will have on the shilling and in turn on the country’s economy,” Muaka said, adding that the government’s fiscal agent was not opposed to the idea.
CMA data shows the bond market has registered a turnover of Sh444.54 billion in the year to September 2018.
Muaka said the capital markets’ regulator has already received proposals from Afrexim Bank and IFC to issue dollar denominated bonds and engagements are still ongoing.
According to CMA’s second quarter soundness report, Treasury bonds account for 99.88 per cent of Kenya’s total bond market leaving corporate bonds at a low 0.12 per cent.
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