Treasury Raises Ksh 34.9 Bn from 10 and 20-year Bonds

The Central bank of Kenya (CBK) raised Ksh 17 billion from the KSh10 billion target Tap Sale on the May bonds.

The National Treasury raised Ksh 34.9 billion from its second tranche of bonds FXD2/2018/10 and FXD1/2021/20.

Investor bids in the auction stood at Ksh38.4 billion against a target of just Ksh 30 billion. The weighted average rate of accepted bids was above the coupon rates at 12.561 (FXD2/2018/10) and 13.792 per cent (FXD1/2021/20) respectively.

Investors were biased towards the longer-dated and higher-yielding, re-opened 20-year paper which has 19.7 years to maturity.

The amount raised enabled Treasury to surpass its target from the January bonds of Ksh 60 billion. 

The bonds were oversubscribed attributed to the longer period of the sale, improved liquidity in the market and the relatively low target amount. 

“The ten and twenty-year yields stood at 12.5914% and 13.5400% as at 14th January 2022.  Overall, the yield curve has been shifting upwards with average yields higher in 2021 compared to the same period in 2020, a trend we expect to continue in 2022,” Sterling Capital Analysts note. 

“We predict that the gradual increase in yields on  short, medium and long-dated debt will continue into the first quarter of 2022 due to budgetary deficit pressures.”

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.


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