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.
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