Exchequer eyes Ksh.50 billion from March bonds

The National treasury wants Ksh.50 billion from the bonds that have been re-opened for auction by the Central Bank of Kenya (CBK).

Investors have seen the re-opening of three bonds that were put in the public eye on Thursday and are set to run up to March 8, 2022, having tenors of 4.7 years, 12.9 years and 24.2 years respectively.

The CBK will try to retain bid rates at 11.2 percent, 12.576 percent, and 13.924 percent for the three reopened bonds, respectively.

Prior to this, the infrastructure bond that was auctioned in early February saw proceeds that exceeded the expectations of the national treasury, surpassing a target of Ksh.75 billion after a bid of Ksh.132.2 billion was achieved representing a performance rate of 176.3 percent.

“We expect the bond to be oversubscribed due to the tax-free nature of the bond. Additionally, prevailing political and pandemic related risks has seen investors prefer longer-dated tenors,” AIB-AIXYS Africa analysts mentioned.

The success rate of the infrastructure bond was brought about by the lack of tax for the bonds put in place.

Due to the previous success rate, the exchequer is looking forward to a high success rate from the current bonds as well.

The high demands for government debt instruments that have been sustained by investors are likely to provide a foundation for the subscriptions made for the March auctions.

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