CBK (Central Bank of Kenya) and Clearstream have launched a market link giving foreign institutional investors easier access to Kenyan Treasury Bonds and Infrastructure Bonds through the DhowCSD platform. Clearstream, based in Germany, is Deutsche Borse Group’s post-trade business. In this move, CBK is making it easier for offshore investors to access the government securities market.
This could support liquidity, pricing transparency and foreign participation in government securities.
Clearstream’s connection to the DhowCSD will provide institutional investors with efficient access to the local market through a unique omnibus account structure, supporting Kenyan Government Bonds, Infrastructure Bonds and Treasury Bills.
“This is a significant milestone in developing Kenya’s financial markets. The link is expected to deepen liquidity, broaden the investor base and enhance resilience of the domestic debt market,” said CBK in a statement.
CBK added that this development underscores its commitment to strengthening and modernizing financial market infrastructure, fostering greater integration with the global financial system and advancing Kenya’s position as one of the leading financial centres in Africa, after South Africa. This development builds on the transformative initiatives to unlock the full potential the DhowCSD. This platform is transforming Kenya’s financial markets through enhanced operational efficiency and expansion of digital access, market deepening for boarder financial inclusion, and improved monetary policy operations.
CBK said it remains committed to upscaling Kenya’s financial market infrastructure to premier status, driving financial inclusion and anchoring long-term financial stability.
A demonstration of high liquidity in the Government market is shown by a recent one-day 20-year and 25-year Treasury Bond tap sale. CBK targeted to raise KSh 20 billion and received bids worth KSh 31 billion. The 20-year bond received bids worth KSh 6.4 billion while the 25-year bond received bids worth KSh 24.6 billion. CBK accepted KSh 6.1 billion and KSh 23.1 billion for the 20-year and 25-year treasury bonds, with the 25-year drawing in 79.4% of total bids.
CBK was offering bidders a coupon rate of 13.2% and 13.9% for the 20-year and 25-year Treasury Bond but paid a higher rate for 13.9% and 14.9% for the two bonds respectively, with the state fiscal agent borrowing a total of KSh 29.24 billion in this auction.
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