Treasury floats bonds in bid to raise Sh25bn

The National Treasury has floated five- and 20-year bonds, the latter with improved yields, to raise a total of Sh25 billion whose bidding concluded Tuesday and the auction is set for Wednesday.
“The Central Bank of Kenya, acting as the fiscal agent of the Republic of Kenya, is offering the investing public an opportunity to invest in five- and 20-year fixed-coupon Treasury bonds,” said the CBK in a statement.

The coupon rate on the 20-year bond is set at 14 per cent, indicating that an investor will earn seven per cent every six months when the interest income is normally calculated and paid.

Currently, the highest coupon for 20-year bonds listed on the Nairobi Securities Exchange is 13.75 per cent for the instrument issued in June 2008.

This was at a time when the economy was still experiencing difficulties as a result of the political violence in the early part of the year.

The most recent 20-year bond was issued in November 2012 at 12 per cent coupon, which was then considered to be an indication that the country had emerged from the exchange rate crisis that hit the economy in late 2011 and stretched all the way to the middle of the following year. In the current issue, the five-year bond coupon rate will however, be determined by the market.