Investor appetites return with November bonds oversubscribed

Investor appetites for Treasury bonds picked up again this month after a slight hiccup in October with the November issue 68.3 per cent oversubscribed.

The investors sunk Ksh.84.2 billion in the issue that closed on Tuesday against a target of just Ksh.50 billion for the re-opened 25-year paper and a new five-year timed Treasury.

The shorter maturing five-year paper received the bulk of bids at Ksh.66.6 billion with investors seemingly looking to avoid longevity risks represented by the longer-dated alternative.

From the offers, the Central Bank of Kenya (CBK) has accepted Ksh.69.5 billion, proceeds which all represent new domestic borrowing by the government from bonds this month.

Besides signaling a return of investor appetites for bonds, the high subscription rate for the issue mirrors improving liquidity in the interbank market.

The closing of the issue will serve to tame the significant liquidity in the market which had seen the Central Bank of Kenya (CBK) step up open market operations (OMO) to minimize currency volatility by controlling the surplus cash.

Last month, bonds offered to market participants failed to hit their mark as subscriptions faltered for the first time in the new fiscal year.