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Fresh standoff as investors, CBK split on returns in latest bond sale
The reopened 30-year bond was undersubscribed with bids worth Sh8.07 billion, signalling that investors were largely unwilling to lend to the government at its coupon (interest) rate of 12 percent.
A fresh standoff between investors and the Central Bank of Kenya (CBK) over interest rates rocked Wednesday’s first auction of the three-tranche September bond issuance, where just Sh2.39 billion was raised out of a targeted Sh20 billion.
The reopened 30-year bond was undersubscribed with bids worth Sh8.07 billion, signalling that investors were largely unwilling to lend to the government at its coupon (interest) rate of 12 percent, which works out to a net return of 10.8 percent after a withholding tax charge of 10 percent on interest.
