Central Bank of Kenya Accepts KSh 16.3 billion  from its Undersubscribed 25-year Bond

The Central Bank of Kenya (CBK) has approved the acquisition of 100 percent shareholding of National Bank Limited (NBK) by KCB Group PLC.

Kenya’s central bank accepted Ksh 16.3 billion of the 25-year amortised bond (IFB1/2019/25) on offer at an auction on Wednesday attributed to its unattractive and duration risk associated with long-term papers.

The Central Bank of Kenya (CBK) had offered  Ksh 50 billion of the fixed-rate Treasury bonds with a 12.2% coupon with proceeds expected to partially fund infrastructure projects in transport, water, and energy sectors.

It received bids worth, Ksh 29.37  billion, but accepted Ksh 16.30 billion of bonds, ‘ indicating that bids were largely not within ranges the Central Bank of Kenya (CBK) deemed acceptable,” said Cytonn Investments. The overall subscription rate was 58.8%.

It said the weighted average yield to maturity in the auction was 12.65%.

The redemption date is February 2044, but half of the outstanding principal amount will be paid out in March 2034.

Financial Analysts -Genghis Capital, Commercial Bank of Africa Limited analysts Faith Atiti and Stephanie Kimani and Cytonn Investments had said the bond was unattractive to long term buyers.