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Market Report – 6th August 2021


Faida Research - August 9, 2021 - 0 comments

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Feature of the week:

CBK Invites Bids for FXD3/2019/10 and FXD1/2018/20 (Re-opened) and FXD1/2021/21 Treasury Bonds

 The Central Bank of Kenya (CBK), acting in its capacity as fiscal agent for the Republic of Kenya, has invited bids for two re-opened 10 and 20 year treasury bonds FXD3/2019/10 and FXD1/2018/20 respectively and a newly issued FXD1/2021/20 bond with the intention of raising KES 60.0 billion for budgetary support.

The features of the bonds are shown in the table below:

  FXD3/2019/10 FXD1/2018/20 FXD1/2021/20
Amount KES 60.0 billion
Tenor 8.1 years 16.7 years 20.0 years
Coupon rate 11.517% 13.200% Market determined at auction
Taxation 10.0% 10.0% 10.0%
Period of sale 26/07/2021 to 10/08/2021
Redemption date 06/08/2029 01/03/2038 22/07/2041

Source: CBK

  • We recommend bidding as follows:
    1. FXD3/2019/10: 11.90% to 12.05% (non-aggressive): 12.10% to 12.30% (aggressive)
    2. FXD1/2018/20: 13.10% to 13.25% (non-aggressive): 13.30% to 13.40% (aggressive)
  • FXD1/2021/20: 13.10% to 13.30% (non-aggressive): 13.35% to 13.55% (aggressive)

Equities Market Summary:

Nairobi Securities Exchange Performance

The All Share Index (NASI) rose by 0.6% w/w while the NSE 20 remained flat to close the week at 178.50 and 1,974.46 respectively characterized by a decline in both market turnover(11.9% to KES 1.5 billion) and number of shares traded(18.0% to 45.3 million shares). There were notable price gains on Stanbic (8.8% w/w to KES 92.50), CIC (4.7% w/w to KES 3.10), ILAM Fahari IREIT (3.6% w/w to KES 6.98), KCB (2.3% w/w to KES 46.75), Equity (2.2% w/w to KES 50.00) and Standard Chartered (1.2% w/w to KES 131). Safaricom also edged up by 0.4% w/w to KES 42.10 on reports that its current Ethiopia license maybe upgraded to include mobile money services. There was however caution as Ethiopia is also expected to issue a second mobile license(which means more competition).We expect a sustained upward price momentum on banking counters (ahead of the 1H2021 results) albeit at weaker pace(profit taking activities will likely creep in leading to higher supply).

 

*We are currently updating our recommendations

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