National Treasury to raise Sh70b in August bond
National Treasury will borrow Sh70 billion through an 11-year infrastructure bond starting next month.
The Central Bank of Kenya (CBK) said it will receive bids for the bond, with a coupon rate of 10.9 per cent between July 28, 2020 and August 18, 2020, auctioning it a day later.
“Duly completed bond application forms must be submitted to any branch of the Central Bank in the specified tender box or via Treasury Mobile Direct (TMD) or CBK Internet Banking,” said Davis Luusa, CBK’s Director, financial markets.
CBK was recently in the market for Sh40 billion through a tap sale on an existing 20 year paper issued in 2018 - which in a way is like raising a new bond - which incidents senior research analyst at Genghis CapitalChurchill Ogutu calls “unprecedented in the sense they amounted to CBK mopping up excess liquidity in the market”.
Liquidity mop-up
“Up until last month, CBK has been seeking between 40 billion and 50 billion, but we are seeing them now saying they want to raise between Sh60 billion and Sh70 billion,” said Ogutu.
Unlike previous correspondence where CBK specifically pinpointed projects the funds were intended for, this particular one merely issued blanket statements of the purpose.
He said CBK has maintained an aggressive mop-up of excess liquidity from the market even as the shilling continued losing ground against leading world currencies.
On Tuesday, it traded at 107.85 against the US dollar in what experts attributed to the high demand for the dollar by importers with businesses positively responding to post- Covid-19 lockdowns opportunities.
Against the Sterling Pound, it dropped to 136.74 from 134 while trading against the Euro currently trading at 123.21.
