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Market Continues to Shun Long-Term Government Securities

The tap sale of the 6.5-year infra bond raised Ksh.47. 867 billion last week.  Since the offer was for 25 billion, the oversubscription may lead you to think that the government securities market has returned to normalcy. 

However, in the same week, T-Bills continued with underperformance, with 26.98% and 19.66% undersubscription for the six-month and one-year bills respectively. And this at 15.55% and 15.81% interest! 

Meanwhile, the 91-day treasury bill whose interest is only marginally lower at 15.54% was heavily oversubscribed at 485%.

The 17.9% interest on the infra bond is tax-free, making the effective interest rate 21.1%, and is the reason for the oversubscription.

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