CBK Announces Ksh 31.5Bn Tap Sale on the March Infrastructure Bond

The National Treasury missed its target of raising Ksh.60 billion from the domestic debt market in May only managing Ksh.31.7 billion.

The Central Bank of Kenya has announced a tap sale worth Ksh 31.5 billion with the period of sale closing Friday for its three reopened bonds –a five-year, 15-year and 25-year paper.

Initially, the CBK had sought to raise Ksh 50 billion from the bonds. It only received bids worth Kshs 40.9 billion and accepted bids worth Kshs 18.5 billion, translating to a 45.1 percent acceptance rate.

The sale is going at the average accepted yield rate of 12.0 percent, 13.7 percent, and 14.0 percent for FXD1/2021/05, FXD1/2020/15, and FXD1/2021/25, respectively.

“The subscription of the fixed coupon bonds was below our expectation. This could be partly attributed to the February infrastructure bond issue sapping liquidity from the market and investors’ concern over rising inflation and the weakening shilling,” said investment bank AIB-AXYS Africa in a fixed income note as quoted by the Business Daily.

“Having frontloaded much of the local borrowing in the first seven months of this fiscal calendar, we expect borrowing pressure in subsequent months to be muted. However, risks to this outlook have increased to the downside,” NCBA Market Research stated in its Fixed Income Note dated 14 March 2022.

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