National Treasury seeks Ksh 30 billion in a 5Yr bond

The Central Bank of Kenya, on behalf of the government, has put on offer a new issue 5 year bond, seeking to raise Ksh 30 Billion this October.

The bank will receive bids for the bond until Oct. 17 and auction it on Oct. 18.

As regards to Kenya’s short-term Treasury Bills (T-bills) during the third quarter of 2017, they recorded an under subscription, with the subscription level coming in at 86.2 percent from 140.3 percent in the Q2’2017.

Yields on T-bills remained relatively stable, closing the quarter at 8.1 percent, 10.3 percent, and 11.0 percent, from 8.3 percent, 10.3 percent, and 10.9 percent for the 91, 182, and 364-day papers, respectively, at the end of June 2017.

“The 91-day T-bill is currently trading below its 5-year average of 9.3 percent mainly attributed to the low-interest rates environment we have been experiencing, and we expect this to continue in the short-term,” according to Cytonn Investments.

According to Cytonn, the government will meet its domestic and foreign borrowing target for the 2017/18 fiscal year, as capping of interest rates will make it easier for government to borrow from the domestic market and  with budget estimates projected to decline from Kshs 463.9 bn in FY 2016/17 to Kshs 277.3 bn, according to the 2017 Budget Review and Outlook Paper (BROP).

In September 2017, yields on 3-, 10- and 20-year bonds registered an increase of 23 bps, 14 bps and 20bps, respectively.

On the other hand, yields on 15- year bonds declined by 39 bps, while yields on 5-yr bonds remained flat.

The yield on Kenya’s benchmark 3-, 10- and 20-year bonds increased as the government continued to lure investors. Yields on 15-year bonds declined as a result of high liquidity.

“The acceptance rate on treasury bonds improved gradually in the third quarter of the year, closing at 71.3 percent for the September offer up from 27.3 percent in July, as the market adjusted to the efforts of the CBK to maintain the rates at low levels,” observed Cytonn in their Q3’2017 Markets Review.