Upheaval Sends Kenya’s Yields Higher Than Ghana’s for First Time

NAIROBI (Capital Markets in Africa) – Bond investors are getting worried about the political upheaval in Kenya.

Opposition leader Raila Odinga’s decision to pull out of an election rerun on Tuesday, which threatens a constitutional crisis, spurred the yield on the nation’s dollar bonds due 2024 to rise 13 basis points.

The rate climbed to 6.48 percent as of 2:50 p.m. in Nairobi, above the yield on Ghana’s Eurobonds due 2023 for the first since 2014.

Kenyan notes have lost an average 0.9 percent since Sept. 1, when its courts nullified the original election, compared with a 0.1 percent decline in emerging-market debt.

But Kenya’s loss is Ghana’s gain, as investors hunt for that golden combination of high yields and low risk. The yield on Ghana’s dollar bonds has plummeted more than 160 basis points since a recent peak in July as accelerating growth and its extension of an International Monetary Fund program encourage investors.

Source: Bloomberg Business News