Market News

February T-bond tap sale falls short of Sh18bn target

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The Central Bank of Kenya head office. FILE PHOTO | NMG

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Summary

  • Investors offered Sh11.24 billion, which was 62 percent of the targeted Sh18 billion, with the Central Bank of Kenya (CBK) taking up Sh10.91 billion.
  • The Treasury rolled out the tap sale to make up the deficit on the bond’s initial sale earlier this month, which raised Sh32.1 billion out of a targeted Sh50 billion.
  • The paper consisted of reopened 15-year and 20-year papers first sold in 2013 and 2012 respectively.

The tap sale on February’s Treasury bond issue was undersubscribed by 38 percent despite a liquid money market that would ideally have supported the sale.

Investors offered Sh11.24 billion, which was 62 percent of the targeted Sh18 billion, with the Central Bank of Kenya (CBK) taking up Sh10.91 billion.

The Treasury rolled out the tap sale to make up the deficit on the bond’s initial sale earlier this month, which raised Sh32.1 billion out of a targeted Sh50 billion. The paper consisted of reopened 15-year and 20-year papers first sold in 2013 and 2012 respectively.

“We anticipated the tap sale to be undersubscribed based on the high concentration around similar tenors…the CBK has been re-opening bonds around the seven to eight years maturity profile resulting in a perceived oversupply of the tenors,” said Sterling Capital in a note on the tap sale results.

The underperformance came despite the market remaining liquid during the period of the sale.

The interbank rate, which is a good indicator of liquidity levels in the banking sector, has averaged 4.7 percent so far in February compared to 5.3 percent in January.