Capital Markets

Central bank targets Sh25 billion from reopened bonds

cbk

The Central bank of Kenya, Nairobi on Sunday, November 22, 2020. PHOTO | DENNIS ONSONGO | NMG

The government is in the market seeking Sh25 billion from the reopening of its April bonds — the three and the 15-year papers — after the securities underperformed in the first auction.

The papers were seeking a combined amount of Sh70 billion but fell short after raising Sh60.77 billion.

The government seeks more than double the shortfall of Sh9.23 billion from the resale of these bonds whose underperformance was attributed to investors bidding higher interest rates than the fiscal agent was willing to pay.

The three-year bond has an average interest rate of 11.766 percent while the rate on the 15-year security came in at 13.942 percent.

“Central Bank of Kenya (CBK) is pleased to offer eligible investors an opportunity to participate in a tap sale of the above fixed coupon treasury bonds whose details are as in the prospectus issued value date 11/04/2022 and 25/04/2022 respectively. The Tap Sale will be offered on a first- come -first- served basis,” said CBK in a notice.

The sale will close upon attainment of the Sh25 billion target or on 23rd June, whichever comes first.

The 3-year tranche which sought Sh40 billion received bids worth Sh34.04 billion with CBK accepting Sh33.13 billion and rejecting Sh907.6 million.

The longer-date paper was in the market for Sh30 billion.

It attracted bids worth Sh32.54 billion from investors with the fiscal agent accepting Sh27.63 billion of the amount.

The government’s fiscal agent rejected an amount of Sh4.9 billion due to expensive bids quoted by investors in these securities.

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