Treasury Seeks To Raise Ksh50 Billion From September Bonds

The National Treasury has returned to the domestic debt market as it seeks to raise Ksh.50 billion in September.

The Central Bank of Kenya (CBK) has put out a prospectus asking for bids on two reopened bonds, ten & fifteen year-papers until September 13.

The pair of bonds which first opened earlier in the year have a 9.6 year and 14.5 year time to maturity and have coupon rates of 13.49 and 13.942 per cent respectively.

The CBK is expected to face pressure to offer a premium return to investors who have over recent months begun pricing investments in government securities as riskier.

At the same time the reserve bank and the exchequer face apathy from investors with many especially banks staying off Treasuries due to exposure to fair value losses from rising interest rates.

Investor bids on the September bonds issue are widely expected to favour the shorter maturing 10-year paper as they factor duration risks.

This month, the National Treasury raised Ksh.38.5 billion from bonds as investor appetites returned after sharp undersubscriptions to bonds in July.

The weighted rate of accepted bids for the three reopened papers this month was however higher that the pre-advertised coupon rates by 679 basis points, 1.6 per cent and 519 basis points respectively mirroring the higher interest rates demand from investors.

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