Market impediments to issuance of corporate bonds at the Nairobi Stock Exchange

Abstract

This research work was motivated by the deficiency of corporate bonds at the Nairobi Stock Exchange since the market segment opened in 1996. The study sought to investigate market impediments to issuance of corporate bonds at the exchange. Bonds as debt instruments are a cheaper source of external capital for companies when interest rates are comparatively low. The general objective was to test the significance of issuance procedure, cost of issue, state of secondary market and level of transparency in attracting corporate bonds to the market. Methodology was to survey selected finance officers from the listed companies and stockbrokers to determine if they thought the factors had retarded growth of the public debt market and offering opinion on how the situation could be reversed. Analysis of data was conducted using chi-square which returned a no- difference between observed and expected value for the factors under study. The significance level was 0.05 for each impediment tested.