t least 17,000 Kenyans subscribed for the bond on the first day, raising more than Sh16 million.This will be big and the impact of it will forever change the debt market. What impressed me most its the secondary market feature.
The uptake was so rapid at some point that the mobile network systems were overwhelmed.
By close of the second day, uptake was headed towards 15 per cent subscription .
The initial offer of Sh150 million will close on April 10 while bigger launch of a Sh4.85 billion bond is planned for June.
Mobile users are allowed to purchase as low as Sh3,000 of the government security.
Of 102,632 people registered on M-Akiba, only 5.5 per cent of them actually invested in the bond https://t.co/dNdvfmcYJE pic.twitter.com/f2o5q1HJId
— BusinessDaily (@BD_Africa) April 6, 2017
The seemingly lucrative M-Akiba bond fell short by 86 per cent at the Nairobi Securities Exchange three weeks after its debut launch on June 30.http://www.the-star.co.ke/news/2017/07/24/m-akiba-bond-down-86-per-cent-at-nse_c1602474
The retail government bond which sought to raise Sh1 billion only raised Sh140 million bought by about 235,672 investors.
Fast-forward to now:Also T-bills uptake has plunged for now don't know whether its because of elections or lack of liquidity http://www.businessdailyafrica.com/markets/T-bill-uptake-plunges-as-subscribers-go-for-bonds/539552-4028760-112v7jiz/index.htmlQuoteThe seemingly lucrative M-Akiba bond fell short by 86 per cent at the Nairobi Securities Exchange three weeks after its debut launch on June 30.http://www.the-star.co.ke/news/2017/07/24/m-akiba-bond-down-86-per-cent-at-nse_c1602474
The retail government bond which sought to raise Sh1 billion only raised Sh140 million bought by about 235,672 investors.
What happened? The thing actually looks good for savings, and I'm surprised that many more have not taken it up. The high-flown rhetoric of how the government would now have access to cheaper money for infrastructure etc. also seems to have taken a beating ... at least for now.
Also T-bills uptake has plunged for now don't know whether its because of elections or lack of liquidity http://www.businessdailyafrica.com/markets/T-bill-uptake-plunges-as-subscribers-go-for-bonds/539552-4028760-112v7jiz/index.html
Before investors would easily buy both longterm high yield and T-bills. The small investors maybe don't have cash or going to election uncertainty want to keep cash or regular deposits, we need more data to know exactly the reason.Also T-bills uptake has plunged for now don't know whether its because of elections or lack of liquidity http://www.businessdailyafrica.com/markets/T-bill-uptake-plunges-as-subscribers-go-for-bonds/539552-4028760-112v7jiz/index.html
But note that according to the article "Market analysts said this was triggered by investors shifting focus to the Sh30 billion 10-year bond currently on offer". Obviously at that level, it appears to not be a liquidity issue. Nor, I imagine, is it likely to be about elections if they are just shifting from one government product to another.
Anyway ... what I am really curious about is the "small person" who was supposed to jump at this, and, by logic, really ought to. Perhaps elections and liquidity might be major issues there?
t least 17,000 Kenyans subscribed for the bond on the first day, raising more than Sh16 million.Not much said about this Economic MOAS :D :D :D :D
The uptake was so rapid at some point that the mobile network systems were overwhelmed.
By close of the second day, uptake was headed towards 15 per cent subscription .
The initial offer of Sh150 million will close on April 10 while bigger launch of a Sh4.85 billion bond is planned for June.
Mobile users are allowed to purchase as low as Sh3,000 of the government security.
Not much said about this Economic MOAS :D :D :D :D
(https://pbs.twimg.com/media/DJhBJJDVAAASa5l.jpg:large)
I don't see that as bad news - I see it as opportunity for CBK to innovative and find our what products to push through M-Akiba. Products geared towards the bottom pyramid. Short term fast maturity loans.This shows that the regular mwananchi doesn't have cash to save. It would be interesting to see how mshwari savings is doing. Also a lot need to be done to educate people on the M-Akiba liquidity .Not much said about this Economic MOAS :D :D :D :D
(https://pbs.twimg.com/media/DJhBJJDVAAASa5l.jpg:large)
This shows that the regular mwananchi doesn't have cash to save. It would be interesting to see how mshwari savings is doing. Also a lot need to be done to educate people on the M-Akiba liquidity .
Do you have any firm stand on ANYTHING?I think M-Akiba is great it'll eventually help in diversifying the bond market. Slow uptake this time around shows Kenyans either don't have money or are hesitant to invest. Its not a reflection on the product M-Akiba.This shows that the regular mwananchi doesn't have cash to save. It would be interesting to see how mshwari savings is doing. Also a lot need to be done to educate people on the M-Akiba liquidity .
hk what do you think of the timing? Did the elections affect the uptake?Yes elections has affected everything, from stock market to mama mboga. Also maybe a 5b bond was a little too big without the supporting advertisement to inform potential buyers.
Pundit am all for innovative options but the timing is just wrong. First, private sector activity has slowed down for a while... interest cap means banks are now limiting SMEs... and more savings/deposits are good to increase the banks float which they must lend. M-kiba competes directly with banks for savings.
Second, international debt options have expanded significantly for GoK - even for counties - I see no motivation for GoK to look inwards.
Third, local debt - M-kiba, T-bill & T-bond rates - are much higher than Exim even for shortterm. Rotich and Dr Njoroge are being imprudent with tax money - they should go to the cheapest source.
This option is only good if Kenya goes rogue and is banned from international market - 0% unlikely. That is the real capital democracy provided by China.
Pundit am all for innovative options but the timing is just wrong. First, private sector activity has slowed down for a while... interest cap means banks are now limiting SMEs... and more savings/deposits are good to increase the banks float which they must lend. M-kiba competes directly with banks for savings.M-Akiba bonds are cheaper for government than treasury bonds. So the governments gets cheaper loans while savers get better return than fixed deposits. After all banks just take regular deposits and buy tbills while paying depositors measly deposit rates. Eventually M-Akiba should not only diversify government credit option but lower overall rates. If government can borrow directly from its citizen ala uncle Sam bonds the banks would be forced to lend to private sector to make money.
Second, international debt options have expanded significantly for GoK - even for counties - I see no motivation for GoK to look inwards.
Third, local debt - M-kiba, T-bill & T-bond rates - are much higher than Exim even for shortterm. Rotich and Dr Njoroge are being imprudent with tax money - they should go to the cheapest source.
This option is only good if Kenya goes rogue and is banned from international market - 0% unlikely. That is the real capital democracy provided by China.
We are on the same page.Government isn't in business by issuing M-Akiba bonds anymore than when treasury issues tbills.
This will only turn into a political thing and people will lose money.
KEEP govt out of business. Stick to referee.
M-Akiba bonds are cheaper for government than treasury bonds. So the governments gets cheaper loans while savers get better return than fixed deposits. After all banks just take regular deposits and buy tbills while paying depositors measly deposit rates. Eventually M-Akiba should not only diversify government credit option but lower overall rates. If government can borrow directly from its citizen ala uncle Sam bonds the banks would be forced to lend to private sector to make money.
The onus is on banks especially investments banks to come up with innovative ways of lending to private sector by introducing junk bonds pegged to M-Akiba, the CMA needs to relax debt listing rules to make it easier. Also we need securitization law to make easier to bundle loans together.
The problem with exclusively borrowing in international markets is currency risk. An influx $8b(annual budget deficit) not driven by trade would strengthen the Ksh. decimating tourism, horticulture and manufacturing. Also if ksh. weakens by 10% it becomes more expensive to pay back and from there its a cascading effect. The key is to have both local and international.
The available data shows that banks are loading up on t bills instead of lending to private sector, if government stopped borrowing or shifted borrowing to M-Akiba banks wouldn't have any other option other than to lend to private sector. This is what mwiraria did. That's why its imperative that banks develop another business model to lend to private sector at a higher rate than stipulated spread. That's why junk bonds might come in handy.
The trouble with M-Akiba is that it siphons money from the limited savings/deposits pool - which the banks need to lend and consumers to spend. It is a poor substitute for t-bonds/bills. If M-Akiba succeeds, the banks will not have money for SMEs at all and retail will suffer, at least the fraction now in GoK hands.
We appreciate the necessity of local & international debt mix. The elephant in the room remains - forex rate, GDP, inflation, etc are stable - but private sector continues to suffer. US private sector is massive, robust and cannot be comparable to Kenya - ours must be nurtured by GoK. This is the trouble with reforms - brace for the impact.
Perhaps the reforms should be staggered? Interest caps, CBK bad debt rules, real estate taxes, M-Akiba, etc. We can have a stimulus package.
Rotich should be replaced with a Gema CS. Kalenjins have no exprience in running dynamic economies like kenyan one. Rotich is running experiments on KE economy. I think Ruto is advising him. We know Ruto barely passed his botany classes so for him to be advising a CS on economy is tragic.
Kalenjins belong to Livestock ministry. there they can comeup with plans to steal cattle from pokots