Treasury to raise Sh20b from bond
Central Bank of Kenya (CBK) has reopened another tap sale barely a week after extending the sale of a 15-year bond in what appears to be a deliberate move to avoid the rising cost of domestic debt.
The government is looking for Sh20 billion by reopening sale of the 18-year bond floated earlier this financial year.
The average yield is 13.7 per cent which is still quite high almost 14 per cent, meaning investors are reaping huge margins. “Bids shall be priced at the average rate of accepted bids for the Treasury bond auction value dated June, 13, 2022 and adjusted for interest accrued,” CBK said in a statement posted on social media.
Treasury bill
The tap sale shall run between June 28 and July 7, 2022 or upon attainment of the targeted funds. The Treasury bill auction of June 23, received bids totalling Sh21.2 billion against an advertised amount of Sh24 billion, representing a performance of 88.3 per cent.
Interest rates remained stable, with all the Treasury bills increasing marginally.
“During the Treasury bond tap sale of June 23, the three-year and 15-year fixed rate Treasury bonds received bids totalling Sh19.6 billion against an advertised amount of Sh25 billion, representing a performance rate of 78.4 per cent,” CBK said. Kenya is keen to avoid the Eurobond market whose cost of borrowing hit 13 per cent and could be on the rise as the global economic uncertainty continues to escalate.
In the international market, the yields on Kenya’s Eurobond rose by an average of 11.7 basis points. The yields on the 10-Year Eurobond for Angola and Ghana also rose.
The banking sector regulator also uses bond sales to reduce liquidity in the market and help boost the supply of dollars given that it will be an infrastructure bond that tends to attract foreign investors.
The frequency with which the Treasury is reopening, however, appears to be rising much faster than before with almost a one week interval in what appears to be driven by tight market conditions both locally and internationally.
