CBK(Central Bank of Kenya) received bids worth KSh 53.1 Billion at the December Treasury Bills Auction, out of KSh 40 billion it had offered, an oversubscription of 132.8%.
The 25-year Reopened Treasury Bond was the most attractive, drawing in bids worth KSh 48.5 Billion compared to the 30Yr Reopened Treasury Bond, which received bids worth KSh 4.6 billion, a performance rate of 11.49%.
CBK offer to investors
‘The CBK accepted KSh 47.1 billion while rejecting the more expensive bids. The 30-year Treasury Bond, which had a coupon rate of 12% had a Market Weighted Average Rate of 13.4%-what investors were asking for against Weighted Average Rate of Accepted bids, what CBK was willing to pay at the rate of 13.3%.
CBK used KSh 25.2 Billion out of the Auction proceeds for loan redemptions while KSh21.9 billion was for new borrowing/net repayment.
The 30year reopened treasury bond is due to mature in January 21st 2041 while the 25year Treasury Bond will be due to 9th April 2046.
The CBK had sought to raise KSh 40 Bn through the two reopened bonds: The 30-year T Bond was first sold in 2011 while the 25-year T bond was first sold in 2021 with effective tenors of 15.2 and 20.4 years, respectively
The two reopened bonds, with coupon rates of 12.00% and 13.92% respectively had a sale period running until 3rd December 2025.
The total outstanding amount for the bonds stands at KSh 134.8bn, with the 25 year holding a slightly larger allocation KSh90.5bn.
Given the steady decline in bond yields, as well as recent auction trends, analysts at Standard Investment Bank anticipated increased investor demand for 25-year paper, driven by its comparatively attractive coupon rate.
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