Kenya’s 20 and 5-Year Bonds Oversubscribed by 168.3%; CBK Collects Ksh 69.5 Bn 

Results for Re-Opened Ten & Twenty-Year Treasury Bonds Issue Nos. FXD2/2018/10 & FXD1/2021/20 dated 24 January 2022

Kenya’s re-opened 20-year (FXD1/2019/20) and a new five-year issue (FXD1/2021/5) of November bonds raised Ksh 84.2 billion against a target of Ksh 50 billion, a 168.3% subscription rate.

The 5-year bond had a market-determined coupon rate whereas the reopened FXD1/2019/20 bond had a coupon rate of 12.873%.

The Central Bank of Kenya on behalf of the National Treasury accepted bids worth Ksh 69.5 billion.

The funds would be used for budgetary support for the current fiscal year.

“We attribute the oversubscription, particularly of FXD1/2021/5 to its shorter-term tenure which is a preference for investors in the current market,” Analysts from Sterling Capital said.

“The undersubscription of FXD1/2019/20 is attributable to the oversupply of bonds in the secondary market with near similar tenors to maturity which has a negative impact on price appreciation.”

Their sentiment collaborates with other financial market analysts who had shared similar insights coupled with the improving liquidity in the market.

The results signal an upward shift in the yield curve which stood at 10.7118% and 13.3909% as at 5th November 2021 for the 5 and 20-year tenors respectively.

With short-term interest rates rising steadily analysts project to remain so for the remainder of the year. 

“For investors, Government debt continues to present a compelling investment case for both “Buy and hold” or active bond trading strategies,” Sterling Capital adds.

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