A study of the underlying impediments to issuance of Corporate bonds through Nairobi stock exchange

Abstract

Corporate bonds are debt securities issued by private and public corporations. Companies issue corporate bonds to raise funds for a variety of purposes, such as building a new plant, purchasing equipment, or growing the business. A purchaser or "holder" of a corporate bond is a lender of funds to the "issuer," the company that issued the bond. In exchange, the company promises to pay back the face value of the bond, also known as "principal," on a specified maturity date. Until that date, the corporation usually pays interest at a stated rate, generally semiannually. This study was designed to determine the underlying impediments to the issuance of corporate bonds through the Nairobi Stock Exchange market. A descriptive survey design was chosen to carry out the study. A purposive census was carried out on all the listed firms at the NSE with the intention of obtaining feedback from the entire target population. The data was collected using a set of open and closed questions. The study recommends the major issues of focus to the Capital Markets in Kenya if the bond market is to grow. Such issues include market benchmarks and corporate governance requirements among others. "