The bond, which was deemed short tenored—considering that most infrastructure bonds tend to be nine or 12 years—is expected to fund projects in the roads (Sh10 billion), energy (Sh15 billion) and water (Sh5 billion) sectors.
The government has raised Sh42.02 billion against a target of Sh30 billion from this month’s seven-year infrastructure bond, representing a subscription of 153 per cent.
The oversubscription was unexpected considering the constrained liquidity environment witnessed in the past few weeks.
The bond, which was deemed short tenored—considering that most infrastructure bonds tend to be nine or 12 years—is expected to fund projects in the roads (Sh10 billion), energy (Sh15 billion) and water (Sh5 billion) sectors.
Treasury received bids of Sh45.9 billion and accepted Sh42.02 billion.
Genghis Capital analysts say there is possibility of reopening with an estimated Treasury limit on the bond put at Sh50 billion.
“There is still Sh8 billion they can issue on tap sale,” they said.
The weighted-average accepted rate stood at 12.232 per cent against a market average demand of 12.279 per cent.
The accepted rate is 45 basis points over the pre-auction market level for previous same-tenor infrastructure bond.
They expect upward pressure on the long end of the yield curve going forward.
In the current fiscal year, roads, energy and water sectors have been allocated Sh134.9 billion, Sh46.17 billion and Sh37.2 billion respectively.
To date net domestic borrowing is behind target at Sh69.88 billion against a pro-rated Sh175 billion (Sh466.68 billion in initial 2017/2018 fiscal year budget).
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
