Capital Markets

Analysts see undersubscription of Sh40bn bonds

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Central Bank of Kenya (CBK). FILE PHOTO | NMG

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Summary

  • Two bonds re-opened for this month for sale by the Treasury are expected to remain undersubscribed, analysts said citing liquidity challenges in the market.
  • The Central Bank of Kenya (CBK) this month reopened 15-year and 20-year bonds targeting Sh40 billion.
  • The two bonds, whose sale is set to close today, hold a coupon rate of 12 per cent and 13.2 per cent respectively.

Two bonds re-opened for this month for sale by the Treasury are expected to remain undersubscribed, analysts said citing liquidity challenges in the market.

The Central Bank of Kenya (CBK) this month reopened 15-year and 20-year bonds targeting Sh40 billion.

The two bonds, whose sale is set to close today, hold a coupon rate of 12 per cent and 13.2 per cent respectively.

“The sale of the bond closing today may not do well because the demand has been on the short-term paper,” AIB-AXYS Africa, senior associate debts and equity, Kenneth Minjire said.

“The bonds are expected to remain undersubscribed since a high mop activity in June before the market felt the hit by pandemic affecting the surplus cash for investment.”

The saturation of the long-term papers has also seen under subscription in last week’s tap sale for 25-year Treasury bond that was first sold in 2018 with a target of Sh20 billion.