Report
Genghis Capital
Churchill Ogutu

Weekly Fixed Income & Money Market - Week 45

Weekly Wrap:
Secondary market turnover retreated 39.1% w/w to close at KES 7.67Bn with executed trades cutting across the whole spectrum of the yield curve. The top five traded bonds accounted for 58.6% of the total activity of the week’s turnover. The market ended the week on a subdued note, as the bid-ask spread widened, signaling uncertainty in the market around this month’s auction and the pressure the shilling has seen over the last two weeks. The Consultative Forum for Domestic Debt sat during the week and has consequently issued an amortized infrastructure bond (IFB 1/2018/20) with a coupon of 11.95%. We believe this is partly in a bid to attract foreign inflows to stem the assault on the local unit, which closed the week under pressure, at 102.26.
 
USDKES:
The local currency was under pressure during the week, especially at the tail end, closing at a high of 102.26, having depreciated by 0.8% w/w. The pressure on the local unit was primarily driven by heavy dollar demand from merchandise and oil importers which offset foreign inflows and diaspora remittances. Usable foreign exchange reserves held at the central bank declined by USD 69Mn to USD 8.15Bn; equivalent to 5.40 months of import cover.
 
Money Market:
The average interbank rate rose 38bps to 3.05% in the week. Despite this, the interbank market remained relatively liquid partly due to increased government payments, with the average volumes growing 29.6% during the week to KES 29.5Bn.

This Week's Outlook:
We still expect interest to remain at the short and medium term tenor bonds which are heavily bid. Additionally, we expect to see interest in the 20-year infrastructure bond (11.95% coupon), as IFB issues have been well bid in the past (tax free, with investors loading premiums superior to FXD issues), with the most recent IFB issue receiving a 139.4% subscription.

Up-coming Auctions: 
14th November – IFB1/2018/20 (KES 50.0Bn).
15th November – KES 4.0Bn 91-day, KES 10.0Bn 182-day & KES 10.0Bn 364-day.
12/11/2018 2 EN
Provider
Genghis Capital
Genghis Capital

Genghis Capital is an innovative and customer focused Investment Bank licensed by the Capital Markets Authority (CMA). Founded in 2008, Genghis is one of the leading investment banks in Kenya. Since its establishment, Genghis has achieved tremendous growth to offer a well-diversified portfolio of financial services that includes:

  • i. Securities(Equity/Debt) Trading
  • ii. Research
  • iii. Wealth Management services
  • iv. Investment Advisory & Management via the GenCap Unit Trusts
  • v. Corporate Finance & Transaction Advisory services

The Kenyan Capital Markets continue to develop in size, scope and sophistication. With this is an increasing demand for more specialized and personalized brokerage service and we at Genghis Capital are glad to be able to offer you this service. Our strength lies in ensuring our clients are up to speed with developments at the stock market and the economy. Research and technology remains our competitive and comparative advantage hence Experience, Expertise and Professionalism are some of the qualities you can expect from our team.

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Analysts
Churchill Ogutu

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