CBK Raises Ksh 32.1Bn from Re-opened Treasury Bonds Sale, Off Target
The Central Bank of Kenya on Wednesday raised Ksh 32.1 billion from selling the re-opened fifteen-year (FXD1/2013/15) and twenty-year (FXD1/2012/20) Treasury Bonds at a coupon of 11.250% and 12.000% respectively.
The target was Ksh 50 billion. Market analysts had expected demand for the papers to exceed the target due to the improved liquidity and continued search for yield by the risk-averse investing public.
The results of Treasury Bonds value date 8 February 2021. pic.twitter.com/TBKZRkF5bp
— Central Bank of Kenya (@CBKKenya) February 3, 2021
However, Genghis Capital said it was ‘less upbeat of a positive subscription in this week’s auction’. According to Genghis, the January infrastructure bond issuance played a major role in mopping the excess liquidity that was salient at the start of the year.
“Although it can be argued that the rejected bids (Ksh 44.4Bn) would be pivotal in the ongoing bond sale, we believe that role has diminished against the backdrop of last week’s secondary market activity data,” they noted in their February 2021 Primary Bond Auction Note.
On the other hand, Sterling Capital Ltd Analysts on the 76.8% acceptance rate of the re-opened bonds, “The CBK has reopened a lot of bonds with a maturity profile of about 7-8 years resulting in a perceived oversupply of the tenors. This has left little room for capital appreciation, making these tenors unpopular with investors, and we believe this to be the reason for under subscription of the bonds.”
Proceeds of the bond sale will are fo budgetary support in the current financial year.
Total debt service in February 2021 is Ksh 135.8 billion, with Ksh 7.9B billion and Ksh 113.5 billion in T-Bond and T-Bill redemptions respectively while coupon payments stand at Ksh 14.5 billion.