CBK Raise Additional KSh 30.1Bn for Budget Spending in April

CBK (Central Bank of Kenya) received bids worth 38.3 Bn from the April 15^th Auction of a new 30-year Treasury Bond and a re-opened 30-yr Treasury Bond, first sold in 2011 and has 14.9 years to maturity.

This auction, which had an oversubscription of 191.66%, takes place ahead of the 2025/26 fiscal year ending in June this year. The transaction also follows a Switch Auction that saw most investors in the fixed-income debt market keep off, opting to hold on to their 10-year debt instrument instead of switching to the longer-term 15-year-old debt instrument.

CBK issues a brand new T-Bond in April

At this latest April Auction, CBK accepted bids worth 30.1 billion out of the KSh 20 billion that it had offered as investors rushed for the newly issued 30-year Treasury Bond, which received bids worth KSh 31.3 Billion.

The CBK accepted bids worth KSh30.1 Billion as investors rushed for this newly minted 30-year bond, which has a coupon rate of 12.5% and matures in 2056.

The re-opened 30-year Treasury Bond, which has a coupon rate of 12% attracted bids worth 7.1 Billion, an undersubscription of 35.3%.

This April 15^th Auction, to raise additional KSh 20 billion to support budget spending, is the third bond auction this April and follows a KSh 40Bn reopening settled on 6 April that raised KSh 50.19Bn, and runs alongside a KSh 20Bn switch auction which closed on 13 April. Total Bond issuance in April have targeted to raise up to KSh 80Bn so far

Treasury has relied exclusively on re-openings and switch auctions as domestic borrowing tools while maintaining control over coupon rates as yields declined from their 2024 peaks.

Analysts say CBK’s switch to fresh issuance of a 30-year Treasury Bond with a return of 12.50%, after ten consecutive benchmark rate cuts to 8.75%, signals confidence that the rate cycle has turned the corner with a new long-dated benchmark now on the horizon.

The longest-dated paper previously offered this fiscal year was the 25-year old reopened Treasury Bond which matures in April 2046.

The new 30-year treasury bond that matures in 2056, offers institutional investors with immense opportunities to recalibrate their portfolios.

ALSO READ:CBK Floats T-Bonds Worth KSh 60 Bn in March-April For Budget Spending