CBK Raises KSh31.5bn from January Bond Auctions

The Kenya National Treasury Building. Switch auction involves a transaction that exchanges securities held by investors with selected bonds.

The reopened FXD1/2020/005 (2.4 years) and FXD1/2022/015 (14.3 years) January bonds raised Ksh 31.5 billion against a target of Ksh 50.00 billion for budgetary support.

The papers, whose sale period ended on January 10, 2023, carried coupons of 11.667% and 13.942%, respectively.

The auction comes on the heels of an IFB1/2022/006 tap sale conducted from December 14, 2022, to December 22, 2022. From the Ksh 20.0 billion on offer, the government received bids worth Ksh 10.815 billion and accepted Ksh 10.812 billion.

The tap sale came after the 1st December 2022 switch auction, which sought to raise Ksh 87.8 billion. It registered an underperformance as Ksh 49.1 billion was accepted out of the Ksh 52.9 billion bids.

According to Genghis Capital, the government has approximately Ksh 188.1 billion worth of T-Bills, coupon payments, and maturities due in January 2023.

“We believe part of the proceeds from the auction will go towards refinancing upcoming maturities,” they note.

From now on, Genghis analysts believe there will be a sustained uptick in the yield curve as investors target papers offering higher coupon rates as they price in widening fiscal deficit and sky-high inflation.

On January 8, the government was 4.9% ahead of its prorated borrowing target of Kshs 302.0 billion, having borrowed Kshs 316.8 billion of the Kshs 581.7 billion borrowing target for the FY’2022/2023.



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