Treasury raises further Ksh.35B from April’s infrastructure bond sale

The National Treasury has raised a further Ksh.35.4 billion from a tap sale on its April issued infrastructure bond with investors showing an increased appetite for government debt. The tap sale auctioned on behalf of the exchequer by the Central Bank of Kenya (CBK) saw bids cumulated at Ksh.37.8 billion against an advertised Ksh.21 billion to show the overwhelming investor glut. The oversubscription on the secondary issue to April’s infrastructure bond (IFB) takes the total amount raised on the bond to Ksh.74 billion from an initially planned 60 billion to represent an overall subscription rate of 123 percent. Earlier this month, the exchequer ministry accepted Ksh.39 billion from the bond’s primary issue on the nine-year amortized bond after investor bids totalling Ksh.68.4 billion. Local investors who make up the majority of subscribers to the shilling denominated bond have continued to favour the investments in government debt instruments as they seek safe haven investments against Covid-19 lead markets  volatility. Both issues have been priced at a 12.3 percent average interest rate with the CBK maintaining its dislike for expensive investor bids having already rejected Ksh29.4 billion from the first sale in a battle against participants’ aggression. Subscriptions to future IFBs are expected to remain attractive with the National Assembly voting this week to reject the taxation on investor pay-outs to the bond in a means to keep down government interest payment rates. The attractive yields offered in the week tapered investor interests in the Treasury bills (T-bills) towards the short end paper with interest on the 91-day paper rising to Ksh.8.8 billion or an equivalent 220 percent subscription rate from Ksh.2.6 billion last week. Overall subscription to T-bills were however on the rise in the week with interests at 81.7 percent compared to 59.5 percent last week.

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