Investors with accepted bids on the re-opened 10-year paper paid a premium of Sh102.0461 to the par value, locking in the paper’s coupon of 14.151 percent at an implied yield of 14.6913 percent or the weighted average rate for accepted bids.
The longer-dated 20-year paper, meanwhile, sold at a discounted rate of Sh92.1645 percent to par value or an implied yield of 15.1121 percent to attach to the bond’s 13.2 percent coupon.
Re-opened bonds are sold at either a discount or premium to the par value, which is usually set at Sh100, mirroring movements in interest rates since the papers’ previous issue.
The Treasury is seeking a further Sh20 billion from a reopened 10-year paper, initially issued in February this year with a set 16 percent coupon.
The sale of the paper is expected to close next Wednesday, rounding off the Exchequer’s domestic borrowing program for the calendar year.
The December bond auction has come in the backdrop of falling domestic interest rates anchored on the Central Bank of Kenya (CBK) actions to trim benchmark interest rates.
The CBK, which acts as a fiscal agent by running the Treasury bond auctions, has been pushing to lower interest rates on government securities by rejecting expensive investor bids. The apex bank rejected Sh17.9 billion investor bids on the dual auction, which closed on Wednesday.
The gradual ease in domestic interest rates has been anchored on a low inflation rate which remains beneath the five percent mid-point target and a stable exchange rate with the Kenya shilling trading in a narrow-bound range across recent months.
The CBK could provide further momentum for the decline of local rates by slashing its benchmark rate again at the Monetary Policy Committee meeting today.
