Central Bank raises Ksh27.58 Billion of its Five and Ten year Treasury Bond

The Central bank of Kenya (CBK) raised Ksh 27.58 Billion against a target of Ksh 30 billion in its  August primary bond auction of Five and Ten year Treasury Bond (FXD1/2017/5 and FXD1/2017/010).

CBK sold Ksh 12.11 Billion worth of 5 year T-bonds against  Ksh 18.71 billion of bids received  and Ksh 5.47 Billion worth of 10 year T-bonds against Ksh 7.95 billion bids received.

The 5-Year Treasury bond had a yield of 12.465 percent compared to 12.520 percent at its last auction and the 10 year bond at 13.060 percent compared to 12.966 percent.

On Tuesday, Genghis Capital Analysts had said of the two bonds, ‘the FXD1/2017/10 will post a dismal performance.”

“The paper notched a total KES 12.19Bn out of a possible KES 30Bn in July and we hold the view an immediate re-opening will not be attractive and will largely be snapped under trading strategies. With improved liquidity conditions in the market, we are positive on the five year paper,” the analysts had projected.

However, they say overall,  “The auction under performed with 88 percent subscription rate; receiving only Ksh 26Bn against a target of Ksh 30Bn. We expect this to cause lethargy in the secondary market because of rate direction uncertainty.”

The CBK received  bids for the bonds between Aug. 7 and Aug. 22, and auctioned the two bonds on Aug. 23.(Wednesday).

The five-year bond had a market-determined coupon, while the reopened 10-year bond had a 12.966 percent coupon.

The CBK on Thursday will auction Ksh 4.0Bn 91-day, Ksh 10.0Bn 182-day and Ksh 10.0Bn 364-day of its short term Treasury bills.

Last week, T-Bill subscription posted its first oversubscription in six auctions; receiving bids worth Ksh 34.76Bn against an average Ksh 11.88Bn in the prior five auctions.