Investors reveal heavy appetite for govt paper as they bid Ksh.61B against Ksh.25B on offer

Investors have revealed heavy appetite for government securities at the start of the year after bidding Ksh.61.2 billion in a Ksh.25 billion offer by the National Treasury.

The heavy bidding on the two- year Treasury bond (T-bond) that went up for sale at the end of 2020 is a reversal from the low investor subscriptions witnessed across December.

For instance, investors only sought to put in Ksh34 billion from a pair of bond sales at the backend of 2020 against Ksh.62 billion on offer.

The Central Bank of Kenya (CBK) however appears to have mastered the markets and struck the right notes by putting on sale the short-tenured two year bond to the delight of investors who have stayed away from longer tenured bond given the current market environment.

In total the exchequer had sought Ksh.75 billion from the market in January to include a Ksh.50 billion infrastructure bond whose sale closes on January 21.

“In the current market environment where the spread of the coronavirus remains a concern and economic activity is muted, investors are likely to focus on the shorter end of the yield curve,” analysts at AIB-AXYS Africa stated.

The infrastructure bond whose results will be released later in the month is expected to also register strengthened investor interest from its tax-free status attraction.

The CBK has accepted Ksh.55.9 billion from the investor bids at a weighted average rate of 9.48 per cent as it maintains its stance on rejecting expensive bids to keep interest rates in check.