The Central Bank of Kenya (CBK) is in search of funds to support the current budget and has floated a Ksh.60 billion Treasury Bond in the domestic market.
This reopened bond offers a mix of two-, three-, five-, and ten-year fixed coupon options, aiming to raise funds for fiscal support.
Interested Bidders
Investors have until May 6, 2024, to submit their bids, with the bonds priced at a competitive 15% interest rate.
The details of the coupon rates for the different maturity periods are as follows: a two-year paper at a coupon rate of 16.9%, a three-year paper at 18.3%, a five-year paper at 16.8%, and a ten-year paper at 14.1%.
Also Read: CBK Seeks Ksh.40 Billion in Domestic Market for Budgetary Support
The first three papers are subject to a 15% Value Added Tax (VAT), while the ten-year paper attracts a 10% VAT.
Attractive Returns for Investors
Despite this, the bonds are designed to offer attractive returns and qualify for the statutory liquidity requirement ratio for both commercial banks and non-bank financial institutions.
In case of unforeseen circumstances, the CBK has outlined a safety net by mentioning that it will rediscount the bonds as a last resort at a rate of 3% above the prevailing market yield or the coupon rate, whichever of the two is higher.
This serves as a prudent measure to ensure the stability and reliability of the bond issue.
