National Treasury’s 18-year Infrastructure bond received bids valued at Ksh.76.4 billion and was oversubscribed at 101.8 percent, the Central Bank of Kenya reported on Wednesday.
Treasury received Ksh.73.8 billion from the sale whose auction ended on Tuesday against a target of Ksh 75 billion.
The weighted average rate of accepted yields stood at a high of 13.742 percent.
The bond will be fully redeemed on 21st May 2040, with the first interest payment scheduled for 12th December 2023.
“Notably, the CBK has in recent auctions been trying to manage th cost of borrowing by keeping. However, given the magnitude of the Government’s fiscal financing needs, the CBK accepted aggressive bids during this particular auction as illustrated by the results,” Sterling Capital Research commentary.
This is the second infrastructure bond following the February auction that raised KSh98.6 billion, surpassing the government fiscal agent’s target of KSh75 billion.
The bond came with a 12.96 percent tax-free interest.
In the 10 months to April 2022, total tax revenues collected amounted to Ksh 1.46 trillion, translating to 84per cent of the full year budget, suggesting that the Kenya Revenue Authority (KRA) is on track to meet its full-year target.
“In the period, KES 2.4 trillion was spent, about 73 percent of the target for the cycle. To bridge the revenue gap, against a backdrop of tightening external credit conditions, the government has scaled up to local borrowing,” NCBA MarketResearch says in its NCBA Monthly Economic Report – June 2022.
“Increased government spending predominantly in an effort to ease the strain from rising commodity prices may widen the fiscal deficit from the projected 6.2 percent of GDP in the FY 2022/23.”
Khusoko is now on Telegram. Click here to join our channel and stay updated with the latest East African business news and updates.
