National Treasury raises Ksh.53.7B from local borrowing in November

The National Treasury has raised Ksh.53.7 billion from the local market in November’s primary bond sale completed on Tuesday.

The pair of bonds with 7.5 and 17.4 years to maturity saw a near equal split in investor interests drawing bids of Ksh.56 billion against an offer of Ksh.40 billion.

This to represent a 140 per cent performance rate to mirror the continued concentration of investor interests in government securities amidst volatility in alternative investment classes.

Investors continued to put in bids with interest rates bound within the Central Bank of Kenya (CBK) targets as the reserve bank consistently rejects expensive bids.

The weighted average rate of accepted bids for the pair of bonds stood at 11.44 and 13.24 per cent respectively in line with CBK targeted coupon rates of 12 and 13.2 per cent.

Treasury’s 2020/2021 loca borrowing program has continued to enjoy smooth sailing from an abundance of investor appetites especially on longer tenured paper.

Earlier this month, the exchequer raised another Ksh.8 billion through the tap sale of a 25 year tenured bond.

The proceeds were however less than the advertised amount of Ksh.20 billion mirroring investor dislike for longer-maturing government paper.

Investors have favoured investments in mid-tenured bond offers given their marginally reduced longevity risks and solid returns.

The National Treasury is expected to borrow a total of Ksh.600 billion from the domestic markets by June next year and has since raised Ksh.152.4 billion through the first quarter of the fiscal year to September.