The Treasury received slightly more than half the targeted amount in reopened 20- and 25-year bonds in last week’s auction, following lukewarm bidding by investors in the assets seen as a safe haven.
The Treasury targeted Sh50 billion but investors bid Sh35.155 billion for both tenors. Investors last week as well offered Sh21 billion for Treasury bills as the government sought Sh24 billion.
The Central Bank of Kenya (CBK) accepted Sh22.913 billion at average rates of 13.20 percent and 13.40 percent for the 20-year and 25-year bonds respectively, as the government continued to reject aggressive bids post repeal of interest rate cap.
Investors had placed bids at an average rate of 13.461 percent and 13.40 percent respectively.
Analysts attributed the inadequate bidding to increased uncertainty due to the outbreak of coronavirus, pushing them to short-term securities.
“The fragile macroeconomic environment has naturally led to sub-par appetite for the longer term bonds. The argument in an investor's mind is the uncertainty risk of longer maturity bonds, hence risk-on sentiment has been on short-term bonds,’’ senior research analyst at Genghis Capital, Churchill Ogutu said.
The low subscription was widely expected to improve as foreign investors sold positions at the stock markets.
However, the investors have continued to show preference for shorter term bonds and Treasury bills especially the 364-day tenor paper.