They were billed as the saviors of the Nairobi Securities Exchange (NSE) debt market, but the corporate bonds issued by giants Safaricom and East African Breweries PLC (EABL) have hit a wall of silence in secondary trading.

Despite being heavily oversubscribed during their initial offers—a testament to the immense liquidity seeking quality paper—the bonds have barely traded since listing. The Capital Markets Authority (CMA) has flagged this "hoarding" behavior as a major hurdle to deepening the market. Investors, it seems, are treating these bonds as "buy-to-hold" assets rather than tradable instruments.

The Liquidity Trap

The logic of the investors is simple but damaging for market vibrancy. With interest rates fluctuating and government securities offering mixed signals, institutional investors (pension funds and insurers) prefer to lock in the attractive coupon rates of the EABL and Safaricom bonds until maturity. They are sitting on the paper, refusing to sell.

• The Consequence: A "dry" secondary market means new investors cannot enter, and price discovery is impossible.
• The Regulator’s View: The CMA noted that while issuance was successful, the "overall liquidity in the corporate bond segment remained constrained."
• The Big Picture: For the NSE to become a true capital hub, bonds must circulate. The current stagnation turns the exchange into a graveyard for high-value debt.

What Next for Corporate Debt?

This phenomenon forces a rethink of market incentives. If blue-chip paper is hoarded, the exchange fails in its duty to allocate capital efficiently. Analysts suggest that market makers are needed to force liquidity. Until then, the Safaricom and EABL bonds remain prestigious trophies in pension fund vaults, rather than the fuel for a dynamic trading floor.