A multi-billion shilling tea bonus payout has boosted market liquidity helping the realisation of 79.30 percent performance in the uptake of the re-opened 15-year Treasury bond.
The interbank rate also fell to seven-year low at 2.0459 percent as Kenya Tea Development Authority this week released Sh62 billion bonus to local banks for payment to farmers.
Central Bank of Kenya (CBK) had opted for a bond re-opening over a tap sale to raise Sh32 billion with a coupon rate of 12.75 percent whose period of sale ended on October 30.
During the auction, CBK received bids worth Sh25.37 billion but accepted Sh21.26 billion. Competitive bids stood at Sh16.12 billion and non-competitive bids were Sh5.13 billion.
Analysts on Thursday said overall, they view CBK’s signalling effect with the bond re-opening was achieved with average participant bids anchored to the accepted rate from the initial bond offering so as not to miss out this time round.
“We also view the high liquidity environment — attributed to tea bonus payout, premium payments to insurance firms and contributions to fund managers — as boosting the uptake,” said Churchill Ogutu, a macroeconomic and fixed income analyst at investment bank Genghis Capital.
Analysts said the CBK has been mopping liquidity on a number of occasions in the last two weeks.
As anticipated, the weighted average on the accepted bids slightly dropped by 0.012 percent to 12.734 percent.
Demand remained elevated in the short-term papers, outstripping supply.
There has been a string of long-term paper issues and analysts anticipate, as the market approach the end of the year, either a shorter-term paper or an infrastructure bond issuance.
The issuing of longer-term bonds is in a bid to lengthen the average time to maturity for the Kenyan government’s debt portfolio.
Analysts say the continued issuance of medium to long-term domestic securities is well guided as lengthening the average maturity will reduce the pressures on the domestic debt market.