The Central Bank of Kenya, on behalf of the Ministry of Finance, is seeking Ksh.60 billion from the domestic debt market in May.
The bonds feature FXD1/2022/10 and FXD1/2021/25, with tenors to maturity of 10.0 years and 24.1 years, respectively.
The pair of bonds will be on sale from Thursday until May 10. The coupon rate for FXD1/2022/10 is market-determined while that of FXD1/2021/25 is 13.9 percent.
Funds raised will be used for budgetary support in the current fiscal year.
In April, the exchequer realized Ksh.60.7 billion in proceeds against a target of Ksh.70 billion for FXD1/2022/03 and FXD1/2022/15, which recorded an undersubscription of 95.1 percent.
The undersubscription was partly attributable to the tightened liquidity in the money market during the period of issue. During the period, Liquidity in the money markets remained stable with the average interbank rate remaining relatively unchanged at 4.7 percent, as recorded in March 2022.
Investors preferred the longer-dated bond, FXD1/2022/15, which recorded an oversubscription of 108.5 percent, in anticipation of a higher yield.
The fifteen-year bond’s weighted average accepted yield and coupon rate was 13.9 percent.
“We expect investors to prefer the longer-dated paper, FXD1/2021/25, in search of higher yields. FXD1/2021/25 is currently trading in the secondary market at a yield of 13.9%, and as such, our recommended bidding range is 13.7%-14.1% for FXD1/2021/25 and 13.1%-13.5% for FXD1/2022/10, the range at which bonds of a similar tenor are trading at,” Cytonn Investments give projections.