UPDATE 1-Kenyan shilling holds steady ahead of government bond sale

Tue Mar 18, 2014 10:36am EDT

* Foreign demand for bond sale to offset dollar demand
    * Safaricom, Co-operative bank gain

 (Adds stocks, bonds, market close)
    By George Obulutsa
    NAIROBI, March 18 (Reuters) - The Kenyan shilling 
held steady on Tuesday and traders said any dollar demand would
be met by inflows from foreign investors seeking to buy
government debt this week, traders said.
    Stocks edged higher on the Nairobi Securities Exchange
benchmark index, reversing the previous session's drop.
    At 1300 GMT, commercial banks quoted the shilling at
86.45/55, unchanged from Monday's close, ahead of Wednesday's
sale of a two-year bond to raise up to 15 billion shillings.
    "I think it will just trade flat towards the end of the
month, because we have the two-year bond," said John Muli, a
trader at African Banking Corporation. "So we expect some
inflows this week or early on Monday, plus the tight liquidity
will support it." 
    In recent weeks the Central Bank of Kenya (CBK) has
regularly drained excess liquidity from the market, mainly using
repurchase agreements (repos).
    "As long as CBK is in the market, the shilling will be
propped up," said I&M Bank trader Eric Gathecha. 
    The regulator stayed out of the money market on Tuesday. 
    At the bourse, the NSE-20 Share Index closed up 6.08 points,
or 0.12 percent, to close at 4,928.74 points. 
    Leading telecoms firm Safaricom, ended 0.8 percent
higher at 12.20 shillings per share. Equities analysts
anticipate bumper full-year earnings, a forecast that has
attracted both local and foreign investors.
    Co-operative Bank's share price gained 0.5 percent
to 19.10 shillings ahead of its full year results on Wednesday.
    "Obviously the market appears to be expecting a favourable
performance," said Ian Gachichio, research analyst at Kestrel
Capital. 
    On the secondary market, government bonds valued at 1.3
billion shillings were traded, up from 1.23 billion shillings on
Monday.
    
               ...........................Shilling spot rates
                  .....................Shilling forward rates
                           .......................Cross rates
         ..................................Local contributors
           .......................Central Bank of Kenya Index
          .....................Kenyan Bonds contributor pages
                          ...............Treasury bill yields
        ..................Central bank open market operations
        .........................Horizontal repo transactions
         ,       ................Daily interbank lending rate
              .............................Kenya Bond pricing
             ..................Real time Africa economic data
 <ECI & AFR> ...........................African economic news
          .................................NSE-20 Share Index
         .................................NSE All Share Index
             ...........................FT NSE Kenya 15 Index
             .......................... FT NSE Kenya 25 Index
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 (Additional reporting by Drazen Jorgic; Editing by Richard
Lough)
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