New Kenya-based, East Africa bond exchange to launch this year
- The newly established East African Bond Exchange (EABX) is set to compete with the Nairobi Securities Exchange and expects significant growth potential in Kenya's bond market.
- The EABX aims to establish a self-regulatory organization for the fixed-income market and facilitate the trading of fixed-income securities across multiple East African Community member nations.
- The EABX's vision includes expanding beyond Kenya to include Tanzania, Uganda, Rwanda, Burundi, the Democratic Republic of Congo, South Sudan, and Somalia.
The newly established East African Bond Exchange (EABX), poised to become a competitor to the Nairobi Securities Exchange, anticipates significant growth potential in Kenya's bond market as it prepares to commence operations in the first half of this year.
Originating from the Bond Market Association in 2009, which served as a forum for fund managers, stockbrokers, investment bankers, and lenders, the EABX aims to establish a self-regulatory organization for the fixed-income market.
With a broader vision, the EABX aims to facilitate the trading of fixed-income securities across nearly all East African Community member nations. Beyond Kenya, these countries include Tanzania, Uganda, Rwanda, Burundi, the Democratic Republic of Congo, South Sudan, and Somalia.
Despite being the third-largest economy in sub-Saharan Africa, Kenya's corporate debt issuance is significantly low, accounting for only about 0.2% of its gross domestic product (GDP). This is in stark contrast to Asian nations, where corporate debt issuance typically ranges from 20% to 30% of GDP. Also, the potential for trading Kenya's government domestic debt is substantially higher than current levels. While the outstanding liabilities stand at 5 trillion shillings ($31 billion), only around 600 billion shillings were traded in 2023. EABX aims to address this by enabling issuers to better price their securities and providing investors with increased visibility on pricing, leading to potential cost savings in terms of trading fees and issuing costs.