The Central Bank of Kenya (CBK) has accepted Sh34.2 billion from investor bids in the reopened three-year bond whose sale closed Wednesday.
The paper was oversubscribed with investor bids touching Sh43 billion against a target of Sh40 billion, representing a 107.69 percent performance rate.
Proceeds from the sale of the paper will be channelled towards budgetary support.
Investors continue to demand a higher premium on government securities with the reopened three-year paper, which has a remaining term to maturity of 2.9 years, returning an 18.4222 percent weighted average rate of accepted bids against an 18.3854 percent coupon rate.
The investors have purchased the paper at a premium price of Sh102.664 per Sh100 at average yield.
The reopened bond had been expected to register high investor interest based on its shorter duration appeal with bond buyers shunning longer dated issues over term risks in a rising interest rate environment.
The paper was on auction alongside two others; a re-opened five-year one with 4.4 years left to maturity and a 16.844 percent coupon rate and a new 10-year paper whose coupon was set at 16 percent with the CBK choosing to go against the grain of letting the market guide the return in a bid to contain interest rates.
The interest rate achieved from the two papers is likely to edge higher, beating the guidance provided by the coupon rate as investors continue to push for higher returns.
The re-opened five-year paper and the new 10-year one remain on auction until March 20. The CBK had expected to mobilise a combined Sh40 billion from the three papers.
