The National Treasury is seeking an additional Ksh.10 billion from May bonds which recorded an undersubscription of 71.9 per cent in a tap sale.
The tap sale seeks to raise an estimated Ksh.11.4 billion after the rejection of expensive bids by the Central Bank of Kenya (CBK) in the initial issue.
“Central Bank of Kenya is pleased to offer eligible investors an opportunity to participate in a tap sale of the above-fixed coupon Treasury bonds whose details are as in the prospectus issued value date 16/05/2022. The tap sale will be offered on a first-come-first-served basis,” the CBK said in a notice.
Tap Sale of Fixed Coupon Treasury Bond Issue Nos. FXD1/2022/010 and FXD1/2021/025 dated 23/05/2022 pic.twitter.com/sCzoLyKmr9
— Central Bank of Kenya (@CBKKenya) May 17, 2022
Initially, the government sought to raise Kshs 60.0 billion for budgetary support, and received bids worth Kshs 43.1 billion and accepted bids worth Kshs 31.7 billion, translating to a 73.6 per cent acceptance rate.
The longer-dated paper, FXD1/2021/25 had a coupon rate of 13.9 per cent and a market-weighted average rate of 14.0 per cent while FXD1/2022/10 had a coupon and weighted average rate of 13.5 per cent.
“Yields accelerated higher last week on the back of the said inflation expectations. Despite the CBK’s effort to contain pressure on the curve, the 10 year came in nearly 50bps higher at 13.490%. The move on the 25 year was rather subtle at 13.976%. This reflects a combination of a fluid liquidity outlook and firm expectations on the direction of the curve,” NCBA Market Research said in its Weekly Fixed Income note.
The government is 3.5 per cent ahead of its prorated borrowing target of Kshs 587.4 billion having borrowed Kshs 608.1 billion of the Kshs 664.0 billion borrowing targets for the FY’2021/2022.
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