China's economic rebound positive for Kenya's bond market: Regulator

NAIROBI - Kenya's capital market regulator has noted a positive trend in the bond market following the Chinese economic rebound, which it hopes would have a positive impact on the bond market to help finance infrastructure projects.

Capital Market's Authority (CMA) CEO Paul Muthaura said on Wednesday during the release of the first quarter Capital Markets Soundness Report that Beijing's economic performance would have a positive impact on Kenya's bond market, whose demand for infrastructure finance currently faces a gap of $2 billion to $3 billion.

CMA officials said given China's role in financing infrastructure projects in Kenya, the Chinese economic performance has a bigger bearing on Kenya's infrastructure prospects.

"The Authority would avail information on the potential of the Kenyan market to mobilize funds for Kenya's Vision 2030 projects," CMA said in its market soundness report.

Muthaura said foreign capital was flowing easily to other developed economies like the US. This means countries like Kenya, now face competition for foreign capital coming in through the bond market.

However, Kenya's bond yield at 10 percent is attractive enough to attract foreign capital.

Muthaura, who addressed reporters during the launch of the first quarter financial soundness report, which highlights the growth of the financial sector, said he was unhappy with slow nature of new listings at the Nairobi Securities Exchange (NSE), which created a perception the market growth was slowing.

The CMA chief outlined a series of new measures which should be taken to improve the image of Kenya as a regional and international financial hub.

"There is a perception we are having de-listings. The NSE will from now henceforth track a portfolio of companies that present a strong case of Kenya as a choice destination for investment," Muthaura said.

Equity turnover for the first quarter of 2017 stood at $371 million compared to $363 million in 2016, representing a 2.12 percent increase.

Bond turnover for the quarter declined marginally to $1 billion compared to $1.134 billion registered in a similar period in 2016.

Kenya is currently considering the possibility of setting up an infrastructure fund to enable financiers and issuers to trade bonds for infrastructure projects.