The Treasury has floated a second 15-year bond to raise Sh40 billion for budgetary support.
Market analysts expect this to result in higher re-pricing of the five-year papers as demand rises and a lower re-pricing of the 10-year papers in the secondary market.
The 15-year bond coupon is pre-determined at 12.750 per cent, and the closing date for sale is October 16. Secondary trading in multiples of Sh50,000 will commence on October 23.
“The first issue in May 2018, had a weighted average of 13.078 per cent with the coupon coming in at 12.650 per cent.
“The tenor was undersubscribed at 50.540 per cent and only 32.150 per cent of the offer amount was accepted,” said analysts at Standard Investment Bank in a weekly fixed income report.
Analysts said the market is saturated with long end offers, with the last short-term paper having been offered in March.
They believe this is driven by the Central Bank of Kenya (CBK) trying to lengthen the maturity profile and aiming to manage short-term rates within the interest rate cap environment.
As at end of September, the Treasury had raised a total of Sh206.704 billion inclusive of redemptions/rollovers, through 18 bonds-new issues, taps and re-opens.
Last week, the Treasury bond market recorded an improved performance with total volume traded increasing by 48.72 per cent to Sh13.44 billion.
The yields on majority bonds changed marginally. However, yields on medium-term bonds (10-14 years) and long-term bonds (21-25 years) declined by more than 15 basis points.