Monthly bond turnover at the Nairobi Securities Exchange (NSE) rose to a six-year high of Sh69.8 billion in June, buoyed by a liquid market that saw investors turn to the secondary market in search of yields.
NSE data shows the turnover rose 28 percent during the month compared to May when investors traded Sh54.6 billion securities.
Market liquidity was buoyed by heavy maturities of government paper and its payment of pending bills, coupled with reduced appetite for new borrowing in primary auctions as the government closed its fiscal year.
This has depressed the interest rates on offer for new issues, leaving investors to scour the secondary market for higher paying paper.
“Liquidity conditions improved markedly towards the end of June bolstered by government payments to suppliers, government agencies and parastatals,” said Commercial Bank of Africa in a fixed income brief.
Banks, which are the biggest holders of government domestic debt — at 54 percent or Sh1.5 trillion out of the total debt of Sh2.78 trillion — have seen the liquidity at hand on an upward trend this year.