Increased investor interest in bonds traded on the Nairobi Securities Exchange (NSE) saw the bourse book Sh170 million in revenues last year, more than doubling its bond levy income from Sh64.4 million in 2023.
The bond market turnover rose by 140 percent to Sh1.5 trillion in 2024 from Sh643 billion a year prior, setting a new historical record for government securities traded on the exchange.
“This marked a historic milestone, as the bond market crossed Sh1 trillion in cumulative turnover for the first time ever, reflecting another record-breaking achievement for the NSE in 2024,” the bourse said in a trading statement on Friday.
“The strong performance reflected the positive outcomes of our market reforms that increased the efficiency and appeal of the bond market to global and domestic investors.”
The NSE bond levy is currently set at 0.1 percent of the securities transaction value and is deployed to meet the bourse’s operational costs and maintain market infrastructure.
Investor interest in the bonds’ secondary trading market was largely concentrated on an 8.5 percent amortised infrastructure bond issued at the start of the year in February, which bore the highest return in the market at 18.46 percent.
The paper was issued amid high market interest rates as the Central Bank of Kenya (CBK) raised its benchmark interest rate to a high of 13 percent to contain inflationary and exchange rate pressures.
Investors who missed out on the paper’s primary issuance began scouting for the record coupon in the secondary market, pushing the instrument’s price to a premium.
The premium price, meanwhile, became even more lucrative as interest rates began falling from July 2024.
Investors were under pressure to part with a high premium to lock in the 18.46 percent coupon as interest rates began to fall, wiping out the opportunity for a new government security issuance offering a similar high return.
The paper has maintained its premium through to 2025, trading at highs of up to Sh119.32 for every Sh100 unit of the bond on Friday last week.
The high attractiveness of bonds in the secondary market helped the NSE to a six-fold increase in net profit for the year ended December 2024 to Sh116.3 million from Sh18.4 million a year earlier.
The increased profitability was anchored on a faster rise in revenues, with total income jumping 25 percent to Sh828.4 million from Sh662.3 million.
Total expenses for the bourse, meanwhile, grew slower at 12.9 percent to Sh673.2 million from Sh596 million in 2023.
The board of directors of the NSE Plc has recommended the payment of a first and final dividend of Sh0.32 per share, doubling the payout per share from Sh0.16 previously.
The dividend is expected to be paid on or before July 31, 2025 to shareholders on the books at the close of business on May 21, 2025.
The NSE says it will increase its focus on mobilising domestic and diaspora retail investors and upgrading its market trading infrastructure to sustain its growth momentum in 2025, even as it continues to focus on introducing a wider variety of products and services.
