Treasury Targets KSh18bn in February T-bonds Tap Issue

Remittance inflows continue to provide a stable source of foreign exchange for Kenya and key support for many households

Dr Patrick Njoroge, CBK Governor Displaying some of the new currency Notes

Kenya’s National Treasury has reopened its February bond issue to a tap sale seeking to raise an additional KSh18 billion from the market.

The bonds were reopened in the month: FXD1/2013/15 (7.1 years) and FXD1/2012/20 (11.8 Years). Their initial sale last month raised KSh32.1 billion, at a rate of 1.250% and  12.000% respectively that sought to raise KSh50 billion.

The issue recorded an overall subscription rate of 83.7%, mainly attributable to the short bidding period and tightened liquidity in the market.

The tap sale opened from Tuesday, 9th February 2021 to Wednesday, 17th February 2021 or upon attainment of quantum, whichever comes first.

“Bids shall be priced at the average rate of the accepted bids for the Treasury Bond auction value dated 08/02/2021 and adjusted for accrued interest,” said Central Bank of Kenya (CBK), the bonds selling agent, in a notice published Tuesday.

Market analysts are of the view that the central bank has reopened a lot of bonds with a maturity profile of about 7-8 years resulting in a perceived oversupply of the tenors.

“We do not anticipate full uptake of the tap sale based on the high concentration around these tenors making them unpopular with investors,” Sterling Capital Research Analysts note.

The country’s total debt service in February 2021 is Ksh.135.8Bn, with Ksh7.9Bn and Ksh113.5Bn in T-Bond and T-Bill redemptions respectively while coupon payments stand at Ksh.14.5Bn.