Dear All,

I attended a Bond Market Stakeholders Meeting at the Central Bank chaired by the Deputy Governor yesterday afternoon.

Key highlights were as follows:

Monthly Update

· Oversubscriptions for Treasury Bill issues was noted
· Treasury Bill rates increased in August
· There has been a decline in interest rates post-assent of the Banking (Amendment) Act by the President on 24th August 2016
· During the last Treasury Bond Auction, CBK accepted Kshs 18.3 bn out of Kshs 26.3 bn received (Kshs 25 bn was offered) due to aggressive bidding
· There was improvement (4.7%) in secondary bond market turnover in August (Kshs 18.64 bn vs 17.8 bn in July)
· Yield curve shifted upwards at the short end
· Outstanding debt is Kshs 1,771.23 bn in the following proportions: T-Bills (33.8%): T-Bonds (66.2%). The desired threshold is 30:70 (TBills/TBonds)
· Average maturity of Government Securities is 4.3 years and 7 years for Bonds only
· Cumulative borrowing for the fiscal year is Kshs 31.33 bn against annual cumulative target of Kshs 225.3 bn, so the new borrowing requirement is Kshs 193.97 bn

· The DG emphasized that CBK remains focused on ensuring predictability, stability and progress in the bond market and requested the input of participants regarding an indicative (theoretical) yield curve and share with the CBK team before the next meeting

Bond Proposal

· The draft quarterly debt issuance calendar has been withdrawn (please see my meeting notes dated 3rd August, which cited lack of consultation prior to circulation)
· The bond proposal for September is as follows:
o 5-year & 20-year bond
o Issue date: 20th September 2016
o Settlement date: 26th September
o Offer amount: Kshs 25 bn (Green Shoe Option of Kshs 10 bn)
o Coupon: CBK to determine

Market Developments
· There are currently 2 working committees on Capital Markets and Government Debt Management working on the following issues:
1. M-AKIBA
2. Treasury Mobile Direct (TMD)
3. Internet Banking
4. Debt Issuance Calendar
5. OTC Market
6. Short-selling (NB: not for currencies, in view of recent experiences with Nigeria, South Africa and Zambia)
· Target timelines for implementation of these initiatives is June 2017, after which Primary Dealership will be addressed
· The status of the Treasury Single account will be addressed at the next meeting, during which the Director of Banking at CBK will be in attendance to shed more light.

AOB
· With regard to the operationalization of the Banking (Amendment)Act 2015, the DG stated that it was not the responsibility of the CBK to operationalize the law so nobody should expect the CBK to issue the guidelines.

Erokamano @maka, i want to join the bond bandwagon after learning. Patiently waiting for M-Akiba.

You should have added that its not easy to sell a Bond without an haircut!
Remind him he will to sell his Bond at the prevailing rates, not necessary the rate he bought it!
So he may not get his money back in its entirity.

http://www.businessdailyafrica.com/Mobile-traded-M-Akiba-bond-set-to-be-launched-in-a-month/539552-3373004-muar09/index.html

You have two options.
Apply for subsequent bond offers at CBK, primary market.
For example you buy a 5 year bond in a certain month then several months later buy a 10 year bond on offer then (or whichever other is on offer).

Buy an existing bond in secondary market.
For example buy a 5 year bond in a certain month then several months later return to secondary market to buy the same 5 year bond (or any other that is made available for purchase).

You have my email...il get you the IFBs...

@maka. would you recommend to someone to buy the TBond for 26th September.I need to take a break from the market and just pack the little money somewhere.