CBK Sold KSH 5B Infrastructure Bond Against a Target of KSH 30 B

Central Bank of Kenya sold Ksh 5 Billion of the 12-year amortized infrastructure Bond (IFB 1/2017/12) issued in February against a target of Ksh 30 billion.

Out of the 1191 bids received, only 600 were accepted. The rejected bids were worth KSh25.01 billion  The bonds were oversubscribed by 16 percent.

The bond had an effective tenor of 8.8 years, and a coupon of 12.5 percent.

The comparative interest rate yield at 13.555 percent versus 11.556 percent at last sale – central bank.

However, analysts had noted that the 12-year historic average in the last two years has been 13.8622%.

“However, market sentiment on this auction has been between 13.40% -13.80% levels for the expected average accepted yield. We are however, sufficiently confident that there will be a tap sale of the same issue in the near future,” according to Genghis Research brief note.

A tap issue is a procedure that allows borrowers to sell bonds or other short-term debt instruments from past issues. The bonds are issued at their original face value, maturity and coupon rate, but sold at the current market price.

Cytonn Investment’s Analysts had recommended investors to bid at a yield of between 13.50% and 14.25 percent.