CBK Receives Bids Worth KSh53.1Billion at Auction, a 132.8% Oversubscription

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 21^st 2041 while the 25year Treasury Bond will be due to 9^th 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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