Treasury misses Ksh.18B target on February second bond offer

Treasury misses Ksh.18B target on February second bond offer

The National Treasury has missed its target of raising Ksh.18 billion from its second-stab in February’s bond sale.

Having initially fallen shy of its initial Ksh.50 billion, the exchequer invited fresh bids of Ksh.18 billion but still saw investor bids slack at Ksh.11.2 billion.

The Central Bank of Kenya (CBK) accepted a partly Ksh.10.9 billion from the bids with the reserve bank struggling to drop expensive investor bids.

The average rate of accepted bids for the re-opened 15 and 20 year bonds stood at 11.78 and 12.59 per cent at the end of the secondary trading period against coupon rates of 11.25 and 12 per cent indicating upward pressure on yields from aggressive investor bidding.

The lower than accepted investor subscriptions have been largely linked to tightening market liquidity even as investor switch to higher yielding alternative investment classes.

The trend in low subscription is expected to dent government’s budget deficit financing from the local debt market as Treasury’s maintains a high bias for domestic loans.

For instance, in the financial year commencing from July 1, 72 per cent of net financing is expected to emanate from domestic credit sourcing.

The government is expected to face off against rebounding appetites for credit by the private sector as the economy re-emerges from the COVID-19 crisis.

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