CBK’s five year bond attracts bids worth Sh21.4 billion
CBK headquarters in Nairobi. The five year bond sale on Wednesday attracted bids worth Sh21.44 billion, more than double what the government was seeking. Photo/FILE
What you need to know:
Treasury’s five year bond sale on Wednesday attracted bids worth Sh21.44 billion, more than double what the government was seeking
CBK was selling debt worth Sh10 billion on behalf of the government
This is the third five year bond this year and its sale was being done at a time when interest rates on Treasury bills have been pulling in different directions
Treasury’s five year bond sale on Wednesday attracted bids worth Sh21.44 billion, more than double what the government was seeking.
The Central Bank of Kenya (CBK) was selling debt worth Sh10 billion on behalf of the government.
This is the third five year bond this year and its sale was being done at a time when interest rates on Treasury bills have been pulling in different directions.
The regulator said it will accept bids worth Sh14.94 billion meaning that it was rejecting almost a third of the value of investor’s bids.
The bond, which does not have a discount, will pay interest at an annual rate of 11.952 per cent every six months which is higher than the coupon on a prior bond issued in July this year which is paying interest at an annual rate of 11.305 per cent every six months.
Its coupon is however lower than that of a bond with a similar tenor issued at the end of April this year which is paying interest at an annual rate of 12.892 per cent semi-annually.
91, 182 and 364-day Treasury bills yields had maintained an upward trend over four auctions through the week ending November 8 even though most of them had been either fully or oversubscribed.
Yields on the 182-day and 364-day Treasury bills stood at 10.515 and 10.939 per cent during Wednesday’s auction.
91-day Treasury bill yields had hit 9.999 per cent the week ending November 8 after trending upwards from 9.109 per cent during the September 27 auction while rates on 182-day Treasury bills hit 10.559 per cent after trending up from 9.67 per cent.
The 364-day Treasury bill auction had also risen to 10.994 per cent after trending up from 10.792 per cent during the October 18 auction.
In October, CBK closed the sale of additional debt for an infrastructure bond first issued in September after the auction attracted bids worth Sh15.99 billion.
CBK had advertised for Sh16 billion to be offered through tap sales that had been scheduled to happen in October, November and December or until the required amount is raised.
The 12-year government infrastructure bond is paying interest at an annual rate of 11 per cent every six months but its coupon payments and discount of 12.363 is tax free.
The original infrastructure bond auction which was seeking Sh20 billion attracted bids worth Sh37.62 billion but CBK accepted bids worth Sh19.92 billion.
