@scooby. polee in getting back to you late. Details are in Coop Q1 and H1 results show shifts in its bond portfolio, though i'm told they were accounting errors. They didn't book losses like SCBK did in H1. Didn't know there was a global dimension to the shift in fixed income assets ... that's interesting. Do you have some source material I can read on that?

Within the Kenyan context the shift has been from AFS/HFT to HTM for the reasons you've mentioned which is why bonds between 10-15 years have seldom traded. Last I checked they were down 30% YTD. So realizing such a losses may result in errosion of bank equity. However, none have reflected this except SCBK locally, which I wonder whether it depends on the accounting policies adopted.

Must you recognise unrealized losses every quarter or is it annual? I'd think although these losses aren't in the p&l they should have eroded reserves.

Also what's your take on cap bond pricing on the NSE to limit the distortions repos aka buybacks have on the yield curve?

Regulator seems to be more interested in debt sustainability rather than designing a workable interest rate structure. They're more comfortable with an inverted yield curve. Let's just see how far it can go this week.

Yeah, I remember seeing Equity moved a large chunk from AFS to HTM. There's a story in the East African aboutbank profits being 'to good to be true'. They do a ranking on listed banks based on the level disclosure to trading losses, etc... Equity scored a C.

@Scubidu - I still can't figure out why CBK wanted international banks to be the PDs in KE. As for both local and foreign PDs, well with CBK's disorderly monetary policies which makes fund rates hike similar to matutu or bus fare hikes, the exposure to the PDs would be unacceptable. I think this is why this PD idea has quietly gone underground.

As for the mortgage bit, I've just seen this Biz daily article | http://bit.ly/npITEr | and as long as cement and building & construction is going to the cooler, some mortgage lenders, eh, we will wait for next year...

@ hisah, allow me to intrude on your chat with scubidu.

CBK was opting to use PDs so as to ensure that all auctions are "successful" as in the case with Uganda and US. That way, the government will be sure of getting at least the entire amount that it is seeking to raise.

I am not sure if the idea has gone underground. CBK could probably be working out the finer details now that the treasury auctions continue to be under subscribed.

They also have to figure out how few players (i.e. the PDs) could be able to cause more havoc to the already fragile monetary policy...sort of the way we are having issues with the oil majors.

Hope this helps.

Regards