Capital Markets

Treasury nets Sh40bn in tap sale

cbk

Central Bank of Kenya (CBK). FILE PHOTO | NMG

Summary

  • The Treasury hit its target of Sh40 billion in the tap sale on the re-opened 20-year bond, as investors warmed to the long-term paper in a market high on liquidity and low on viable investment options.
  • Central Bank of Kenya (CBK), which is the government’s fiscal agent, received bids worth Sh40.26 billion on the bond that was first sold in 2018, against a target of Sh40 billion.
  • Bids accepted at cost— with accrued interest—were worth Sh41 billion.

The Treasury hit its target of Sh40 billion in the tap sale on the re-opened 20-year bond, as investors warmed to the long-term paper in a market high on liquidity and low on viable investment options.

Central Bank of Kenya (CBK), which is the government’s fiscal agent, received bids worth Sh40.26 billion on the bond that was first sold in 2018, against a target of Sh40 billion.

Bids accepted at cost— with accrued interest—were worth Sh41 billion.

“As expected, it was taken up fully. There has been heavy demand for long tenure bonds from long term buyers such as insurance and pension funds,” Genghis Capital head of securities Kenneth Minjire said.

The tap sale attracted higher demand despite being issued at the same coupon rate (13.2 percent) as to the 2018 sale which it was under-subscribed with bids worth Sh13.86 billion.

The government is also currently selling an 11-year infrastructure bond seeking Sh70 billion, with the sale running until August 18.

The two bond sales were meant to mop up the Sh100 billion the CBK left on the table in July’s bond sale, which attracted bids worth Sh181.8 billion.

However, the uptake of the fixed income securities in the next few months is expected to taper down as liquidity in the market drops, and long-term papers’ demand fills out.