Treasury Seeks Ksh.60 Bn from October Bonds Sale

Kenya’s National Treasury has reopened three bonds to raise Ksh 60 billion in October for budgetary support.

The Treasury Bonds, FXD1/2013/15, FXD3/2019/15 and FXD1/2021/25, have effective tenors of 6.4 years, 12.9 years and 24.7 years, respectively.

The coupon rates are 11.3% for FXD1/2013/15, 12.3% for FXD3/2019/15 and 13.9% for FXD1/2021/25.

The period of the sale runs until 5th October 2021.

“We expect investors to prefer the longer-dated papers, FXD3/2019/15 and FXD1/2021/25, as they search for higher yields. The bonds are currently trading in the secondary market at yields of 11.7%, 12.7% and 13.5%, for FXD1/2013/15, FXD3/2019/15 and FXD1/2021/25, respectively,” Cytonn Investments.

Fixed Income

During the week ending 24 Sept., T-bills remained undersubscribed, with an overall subscription rate at 42.3%, down from the 54.6% recorded the previous week.

Treasury bills auction received bids totalling Ksh 10.2 billion against an advertised amount of Ksh 24.0 billion. Yields edged up an average of 3bps w/w across the T-bill tenors, edging closer to the benchmark policy rate (7.00%).

Eva Wanjiku Otieno, Africa strategist at Standard Chartered Bank Kenya, told Bloomberg that the low subscription rate could be attributed to lower yields than earlier in the year.

“The authorities had also mentioned at some point that they would like to reduce the supply in T-bills so maybe this could be a good way of trying to shift the market interest more toward the longer dates,” she said.