Banks are also unlikely to drive bidding for the bond offer, with the lenders increasingly showing a preference for issues dated five years and below as they keep an eye on their liquidity needs.
Investor appetite for this month’s 15-year bond issue is likely to be dampened by the long tenor, with investors showing a preference for shorter-term papers in recent months due to uncertainty over interest rate direction.
Analysts at Kingdom Securities say while the Sh40 billion reopening of two 15-year tenor papers is likely to hit target, it is unlikely to attract the kind of subscription seen on last month’s infrastructure bond whose first sale saw bids worth Sh55 billion. The bond is on sale until Tuesday.
Banks are also unlikely to drive bidding for the bond offer, with the lenders increasingly showing a preference for issues dated five years and below as they keep an eye on their liquidity needs.
“We are not optimistic that the issues will be heavily subscribed gauging by the appetite in the market…we anticipate an average subscription rate due to the length of maturity of the bonds,” said Kingdom Securities senior analyst Mercyline Kyalo.
“Pension funds and insurance companies are usually attracted by long-dated papers due to their lesser liquidity needs, thus much of the subscription is expected to come from them as they seek to acquire the papers and hold them to maturity.”
The coupon on offer on the two re-opened bonds is 10.25 per cent for the first, which has 7.06 years to maturity having been first issued in 2010, and 12 per cent for the second whose period to maturity is 10.15 years having been initially sold in 2013.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
