Treasury Targets KSh21.65bn in Bond Tap Sale

The Central Bank of Kenya (CBK) which represents the exchequer’s primary debt auctioneer has listed two bonds- a re-opened 15 year issue and a new 25 year bond.

Kenya National Treasury building

Kenya’s National  Treasury has re-opened the sale of a 10-year Treasury bond (FXD 4/2019/10) for November to raise KSh21.65 billion from the tenors.

The sale period is between Nov. 26  to Nov. 28 on a first-come-first-served basis. “Bids shall be priced at the Average rate of the accepted bids for the Treasury Bond Auction value dated 25/11/2019 and adjusted for accrued interest,” says William Nyagaka, Director, Financial Markets. 

“We remain constructive on the recently issued ten-year paper. As we approach year-end, we anticipate liquidity tightness on cyclical factors. Thus at current levels, FXD4/2019/10 will offer attractive entry position compared to other ten-year maturities,” says Genghis Capital in its Weekly Strategy 25t Nov. 2019.

During the initial auction, the bond was undersubscribed, with the subscription rate of 76.8%, on the back of an expected increase in private sector credit with banks now looking to lend to the private sector, due to the interest rate cap repeal.

The bond yield came in at 12.5%.  The acceptance rate on the bond was 73.9%, with the government accepting Ksh28.4 bn of the Ksh 38.4 bn bids received.

NCBA Analysts says this was up 76.00bps from the last auction in August and a 41bps discount compared to papers with similar tenors.