The Central Bank of Kenya has reopened two treasury bonds as it seeks to raise KES 30 billion for budgetary support.
The ten and twenty-year bonds have remaining tenors of 9.5 years and 12.5 years, respectively.
The 10-year bond carries a coupon rate of 16%, which was set in the initial sale in March 2024. The bond received bids amounting to KES 23.9 billion, representing a 59.7% undersubscription.
In contrast, the twenty-year paper was first issued in 2016, attracting 734 bids amounting to Kshs 17.80 billion.
According to the prospectus released by the CBK on Wednesday, the sale of the reopened bonds will run from the 4th to the 18th of September.
Also, a 10% withholding tax applies to the bonds’ discount or interest.
The bonds will be traded on NSE starting on September 23, 2024. Secondary trading of the bonds will be done in multiples of Kes 50,000.
The reopening of FXD1/2024/010 and FXD1/2016/020 signals the CBK’s preference for longer-dated treasure.
Interest rates on government securities have more than doubled over the past two years. In February this year, CBK issued an infrastructure bond at a historic coupon rate of 18.46%.
The high rate of undersubscription of treasures indicates the CBK’s standoff with investors over high rates, as the apex bank seeks to halt the significant rise in interest rates and cut debt service costs.
