Treasury snaps Ksh.10.8 billion as investors snub December tap sale

The National Treasury has ended its domestic borrowing program for the year on a whimper, raising a mere Ksh.10.8 billion against a target of Ksh.20 billion on an infrastructure bond tap-sale.

Despite the lucrative offer for a tax free return and a 13.215 per cent coupon, investors put in bids of just Ksh.10.8 billion in the secondary sale of the infrastructure bond (IFB) which was initially a switch bond.

The primary sale of the IFB, a switch auction, had raised Ksh.52.9 billion against a target of Ksh.87.8 billion helping alleviate part maturities on Treasury bills and bonds which were due on January 9, 2023 by switching the liabilities into a new six-year bond.

Investor apathy to Treasury bonds has largely been tied to prevailing uncertainties including rising interest rates which pose duration risks especially for holders looking to offload their securities in the bonds secondary market.

The jitters have seen investors favour Treasury bills over the long-tenured bonds with the move being mirrored in the weekly Treasury bills (T-bill) auctions.

Moreover, investors have held a bias for the shortest paper, the 91-day Treasury bill as they look to cut exposures to duration related risks.

This week’s Treasury bills auction for instance saw investors put in bids of Ksh.13.9 billion for the 91-day bill on offer against Central Bank of Kenya (CBK) target of Ksh.4 billion.

In contrast, the longer dated 182 and 364-day bills received bids of just Ksh.925.8 million and Ksh.1.9 billion respectively.