Effect Of Interest Rate Risk On Bond Yield In The Kenyan Bond Market
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Date
2018Author
Ndunda, Juliana Minoo Ndunda
Type
ThesisLanguage
enMetadata
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Kenya’s corporate bond market has been having a low operation compared to treasury bonds. As from inception of the bond market in Kenya only a few organizations are trading in bonds. The development the Kenyan bond market has been slow because of many factors which includes insufficient information and the movement of interest rates up and down. This study investigated rate of interest risk on bond yield in the Kenyan bond market. The study variables under investigation were interest rate risk, Term to maturity of the bond, coupon rate, default risk, firm’s profitability position and supply levels. Causal research design was applied. A total number of 15 corporate bonds issued for the period from 2008 to 2014were studied. The data used was collected from Central Bank of Kenya (CBK) report; Nairobi securities exchange (NSE) website report, Capital market authority (CMA) website, and financial statements of the companies and from published journals. Descriptive statistics and inferential analysis were used for data analysis. This was carried out to establish relationship between interest rate risk and the bond yield. An R-square value of 0.674 was established which depicted that a very strong relationship was existing between the variables. Interest rate risk influences strongly the bond yield. This was found to be more evident for the longer term bonds compared to the short term ones. Bonds with longer years to maturity of the bonds affected bond yield. A positive significant and insignificant relationship was observed among the other variables under study. The study recommended that regulations governing bond market investment should be loosened to encourage more investors, it was also recommended that more awareness to be created among investors in regard to corporate bond investment as many investors traded in the treasury bonds compared to corporate bonds. The Treasury bond market in Kenya is more wide compared to the corporate market, therefore a lot needs to be done to create more development in the bond Market sector Kenya
Publisher
University of Nairobi
Subject
The Kenyan Bond MarketRights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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