The government took an additional Sh3 billion above the targeted Sh30 billion from this month’s Treasury bond issues, taking advantage of a 36-per cent oversubscription on the issue.
Investors offered the government Sh40.9 billion against the listed Sh30 billion for the five- and 20-year bond issue, which was sold as market liquidity recovered on the back of government payments to its agencies and contractors at the beginning of the fiscal year.
The investors will be paid interest at the rate of 14 per cent for the five-year bond and 14.8 per cent for the 20-year paper.
Analysts had anticipated heavy bidding for the bonds, saying that investors needed to lock in the attractive interest rates on their portfolios.
“This need has been aggravated by lack of (other) investable opportunities, especially in the equities market,” said Kingdom Securities in a fixed-income note.
In June, the Treasury had raised another Sh30 billion through the sale of two- and 15-year bonds, which attracted bids worth Sh50 billion.
The government is looking at heavy domestic debt maturities in the first quarter of the fiscal year, hence the need to ramp up its borrowing in order to roll over the debt.
In the shorter-term debt, the 182-day Treasury bill has attracted the heaviest bidding over the past week. Investors bid Sh13.9 billion against the Sh6 billion on offer for the six-month paper, with the government accepting Sh13.77 billion at 10.2 per cent.
The Sh6 billion 364-day paper attracted Sh3.3 billion worth of bids (Sh3.28 billion taken up) at an interest rate of 11.2 per cent, with the low margin between it and the six-month paper counting in favour of the shorter debt.
The benchmark 91-day T-bill also performed poorly last week, attracting bids of Sh2.8 billion against an offer of Sh4 billion at a rate of 7.9 per cent.