The government has reopened two 15-year Treasury bonds targeting Sh40 billion amid expectations that interest rates may go up due to higher government appetite for local borrowing.
The Central Bank of Kenya (CBK) said the proceeds of the December bond sale will go towards general budgetary support, with the sale period lasting from November 30 to December 8.
The reopened papers were first sold in 2012 and 2019, meaning they have 6.82 and 13.48 years to maturity. The 6.82-year option is likely to help attract banks to the sale, given that the lenders prefer shorter dated paper.
The 2012 paper carries a coupon of 11 percent, while the 2019 option will carry a coupon of 12.734 percent.
Analysts said that there is a likelihood of yields on government paper inching upwards in coming weeks due to tightening liquidity, and Treasury’s enhanced debt appetite given the underperformance in revenue collection.
“Demand for government securities could moderate further as banks focus on enhancing their balance sheets before the end of the year. This could be aggravated by anticipated quarterly corporate tax settlements (that would cut liquidity),” said analysts at NCBA in a weekly fixed income report.