Kenya government bond offer attracts Sh17.2bn

The five and ten year government bonds that were on auction this week attracted bids worth Sh17.2 billion in an oversubscribed issue.

The government was seeking Sh10 billion through the sale of the two reopened bonds which were first sold in May and in June this year.

According to results from the Central Bank of Kenya, released on Wednesday, most investors went for the five year bond which attracted bids worth Sh10.97 billion while the ten year bond attracted bids worth Sh6.23 billion.

The banking regulator accepted bids worth Sh7.46 billion for the five year bond and Sh5.04 billion for the 10 year bond for a total of Sh12.5 billion meaning that it took in Sh2.5 billion more than it was seeking.

The five year bond is paying interest at 11.855 per cent every half year while its weighted average discount rate rose to 13.548 per cent compared to 11.855 per cent during the previous auction in May.

On the other hand the ten year bond which is paying interest at 12.705 per cent every six months saw its discount rate rise to 13.630 per cent from 12.705 per cent last month.

This week Consolidated Bank said it managed to raise Sh1.7 billion out of the Sh2 billion it was seeking from the sale of its bond which was on offer at the same time as the two government bonds.

The bond which is paying interest at a fixed rate of 13.25 per cent or at a floating rate that is pegged on the 182 day Treasury bill rate plus two per cent but at a minimum of 10 per cent and a maximum of 13.75 per cent was however not offering a discount.

The second largest among tier III or small banks in Kenya, managed to raise 84 per cent of the funds it was seeking for onward lending, expansion and adoption of alternative technology to help grow its business.

According to official results, most investors went for senior notes which attracted Sh1.5 billion representing 87 per cent of the total subscription.