Investors snub second October bond, Treasury taps Ksh.13.7 billion

Investors in government bonds have continued to show apathy for the Treasury instruments by keeping off a second bond on offer this month.

The new 25-year paper whose bidding closed on Tuesday attracted bids of Ksh.14.9 billion against a target of Ksh.20 billion to represent a 74.47 per cent performance rate.

From the bids, the National Treasury has accepted Ksh.13.7 billion, taking total nettings from bonds on offer this month to Ksh.28.8 billion after the mobilisation of Ksh.15.1 billion from two previously reopened bonds.

The nettings are nevertheless a mere 48 per cent of the target of raising Ksh.60 billion from Treasury bonds in October.

The weighted average rate of accepted bids for the new 25-year paper settled at 14.188 per cent, pointing to the continued rise of the Treasury yield curve this year.

The lacklustre performance of the Treasury issue is attributable to increased competition for credit to government by the real economy, with private sector credit growth having expanded notably so far in 2022.

The recently re-opened 10 and 15 year papers whose auction closed on October 4 had a performance rate of just 47 per cent, mirroring a trend of investor snubs over recent months.

The reduced investor appetites for government Treasury is expected to derail the government’s domestic borrowing program for the 2022/23 fiscal year.

The government intends to borrow Ksh.1.040 trillion in the current fiscal year to June 2023 but is behind the targeted rate run having mobilised a measly sum of Ksh.95.7 billion in three months through to the end of September.