Treasury Raises Ksh13.6b from Bond Auctions

The latest bond auction report shows Kenya borrowed Sh13.6 billion through a 25-year-bond at 14.18 percent in a deal that highlights market conditions after months of reopening older auctions by the Central Bank of Kenya (CBK).

The bond auction delivered a 74 percent uptake of the Sh20 billion offer which means Sh14.9 billion was offered, but the banking sector regulator accepted Sh13.6 billion. 

This shows that the 25-year-bond has surpassed the rates on the 30-year-bond making it very expensive relative to other past auctions.

“We anticipate a low subscription against the backdrop of incessant tight liquidity, as well as aggressive bidding as investors ride the yield curve,” investment firm Genghis Capital said just before the bond was floated.

The latest bond auction comes after several reopening of the previous bonds as Kenya tried to avoid high-interest rates while the government has been unable to access the international bond markets due to high-interest rates.

“In the international market, yields on Kenya’s Eurobonds increased by an average of 35.6 basis points,” the central bank said in last week’s update.

This means that the government will be in a tight spot with tight liquidity and difficult funding terrain both locally and internationally.

Treasury Cabinet Secretary nominee Njuguna Ndung’u told Parliament this week that the government will consider concessional loans from foreign nations, in order to retire older and expensive bonds.