Kenyan shilling gains from successful Eurobond

President Kenyatta

The Kenyan shilling strengthened against the dollar on Tuesday after the country's debut Eurobond got bids worth more than four times the $2 billion sought.
At the 1300 GMT close of trade, commercial banks posted the shilling at 87.55/65 per dollar, up from Monday's close of 87.90/88.10.
"We have traded a tad firmer today on the back of improved sentiments, possibly on the successful debut Eurobond," said Duncan Kinuthia, head of trading at Commercial Bank of Africa.
The east African nation received total bids of $8.8 billion for its maiden sovereign bond and plans to take up $2 billion, a senior Kenyan official told Reuters.
The yields, at 5.875 percent for the five-year part of the sovereign bond and 6.875 percent for the 10-year portion, beat the market's expectation of about 8 percent, traders said.
That in turn drove up demand from overseas investors for Kenyan domestic bonds, before an auction of bonds worth 30 billion shillings on Wednesday, they said.
Kinuthia said the shilling's gains may be curtailed by worries about security after Somali Islamist militants killed 49 people in an attack on Sunday night, followed by another assault about 24 hours later that killed another 15.
The assaults in the Mpeketoni area were the latest in a string of gun and bomb attacks that have hurt Kenya's vital tourist business, and which have been blamed on Somalia's al Shabaab militant group.
Western nations have issued travel warnings in the wake of the assaults, prompting many tourists to leave or cancel bookings.
Incidences of attacks have also softened the mood at the Nairobi bourse, where the main NSE-20 share index lost half a percentage point to close at 4,764.11 points, a level it last closed in September last year.
Analysts said the favourable yields attained with the Eurobond would cause interest rates to drop locally, offering some reprieve to shares.
"I don't see it falling away, falling out of bed. I think it is actually quite oversold," said Aly Khan Satchu, an independent trader and analyst. "If you take into account the additional liquidity coming out of the Eurobond, it will lead to a sharp reduction in domestic interest rates and support the market higher."