Treasury Rejects Expensive Bids to Raise KSh27.9 billion in February’s Dual Bond Auction

Kenyan Treasury Bills Undersubscribed First Time in 10-weeks

Kenya National Treasury building

The National Treasury accepted KSh27.9 billion in the February dual-tranche Treasury bond sale below KSh50 billion that had been targeted.

It rejected expensive bids from the investors. 

Treasury was seeking the KSh50 billion in two tranches of 15 and 25-year papers, the latter a reopening of a bond first issued in June 2018 for budgetary support. 

For the 15-year paper, investors bid KSh18.44 billion with the CBK  accepting acceptedKSh5.2 billion at 12.76 percent.

The 25-year paper received bids worth KSh24.06 billion and KSh22.68 billion accepted with acceptances rate 13.59 percent. 

Treasury has borrowed Ksh 216 billion for the local market 72% of this fiscal year’s target.

“Last week’s bond auction offered no fresh guidance as performance reflected the market’s expectations. Yields were consistent with projections at 12.756% and 13.599% for the 15 and reopened 25-year papers respectively, a slight discount to the market. Similarly, the under subscription was no surprise. Given persistent debt sustainability concerns, the appeal for the tenors, at these yields remain low,” commented NCBA Market Analysts.

Genghis Capital had said that although market liquidity had remained adequate ahead of the auction, it is mainly concentrated at the short-end of the curve and funding the apex bank’s open market operations. Therefore, market sentiment is not towards positive uptake (bids at or above Ksh 50.0Bn) of the bond offer.

Kenya Seeks 50 Billion Shilling for Budgetary Support, But Market is Bearish