CBK Collects KSh 27.4 Bn from Five-year Treasury Bonds Auction

The Central Bank of Kenya (CBK) collected KSh 27,428.16 Million from the re-opened five-year (FXD1/2020/5) Treasury Bond Issue representing a 94.6 per cent subscription rate.

The CBK on behalf of the National Treasury had targeted KSh 30,000.00 Million.

This was the first tranche done in January with CBK set to announce results for the re-opened 10 years (FXD2/2018/10) and 20 year Treasury Bonds ( FXD1/2018/20) Auctions on January 20th, 2022 seeking to raise Ksh 60 billion for budgetary support.

From the FXD1/2020/5 auction, Competitive Bids were worth KSh 26,862.19 Million while Non-Competitive Bids amounted to KSh 565.97 Million.

The weighted average rate of accepted bids was 11.234 per cent and a coupon rate of 11.667 per cent.

Results for Re-Opened Five-Year Treasury Bond Issue No. FXD1/2020/005 dated 10 January 2022 pic.twitter.com/YdcEBqQ4O8

— Central Bank of Kenya (@CBKKenya) January 5, 2022

“The auction results signal a downward shift in the five-year yield curve tenor which stood at 11.4162 per cent as at 31st December 2021.  Overall, the yield curve shifted upwards with average yields higher in 2021 compared to the same period in 2020, a trend we expect to continue in 2022,” Sterling Capital Limited said in its Primary Auction Update Note – January 2022.

In 2021, Primary T-bond auctions were oversubscribed, with the subscription rate averaging 147.6 per cent, higher than the 130.6 per cent average subscription rate recorded in 2020, partly attributable to the ample liquidity in the money market. “The market preferred the medium-term bonds, owing to concerns that risks on the longer end of the yield curve may not be sufficiently priced,” Cyton Investments said in its Annual Markets Review 2021.

The average acceptance rate came in at 79.9 per cent in 2021, an 11.4 per cent points increase from the 68.5 per cent recorded in 2020 as the market adjusted to the efforts of the CBK to maintain the rates at low levels.