Hey guys;

Seems Uhuru is keen on this one...going by what we are reading in the papers.

Maswali yangu ni haya (we need to apply theory to our market even though many times it does not work):

1) Should we underweight banks now? Rates could drop and CBK could reduce borrowing from the local market substantially.

2) Should we go long on current bond issues until the Eurobond is issued. If rates drop the current issues could rise in value

3) What does this mean for the stock market?

4) Where will people take all this money that is floating in the economy? Is it time to go heavy in real estate?

Tafakari hayo....have a great day guys....

My take:

1. This bond will not come cheap, given African risk is now priced at the 8% levels, we should not see it lower than that.

2. Proceeds of this bond will be used twofold: to retire the bank facility, priced at 7% albeit short-term, and park the balance in overseas bank accounts and hold as reserves ( useless, really).

3. This will cause interest rates on foreign currency facilities in Kenya to rise, since the bond yield will be the very minimum a bank is willing to earn.

4. It will not stop GOK from raising kenya shilling at present pricing as that will still be needed for recurrent expenditure, like samosas, mandazis and tints for IG's feikols.

I think this bond was not well thought out.

I thought it was headed to the 95-100 in the next 12 months