CBK Floats Ksh 50 Billion Bond For Budgetary Support

The Central Bank has floated 15-year and 20-year Treasury Bonds worth 50 Billion shillings to finance its development projects in Kenya for the current financial year.

The bonds would be auctioned on Wednesday, 16th September 2020 as the Central Bank of Kenya says the Bonds may be re-opened at a future date. Secondary trading of these instruments, in multiples of 50,000.00 shillings, will commence on Tuesday, 22nd September 2020.

CBK had initially injected 35 billion shillings, mopped up 12.10 billion shillings in excess cash at a yield of 3.42 percent, signaling some return to normalcy in the market.

According to financial experts, the government’s elevated debt appetite will continue to invite caution, limiting the move lower on the curve. “This may however be subject to the market’s appetite and the availability of other comparable investment channels.”

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Liquidity conditions are expected to remain more or less unchanged. A situation Cytonn Investments says has contributed to rates remaining relatively stable coupled with the discipline by the Central Bank as they reject expensive bids.

“In our view, the government will not be able to meet their revenue collection targets of Kshs 1.9 trillion for FY’2020/2021 because of the current subdued economic performance in the country brought about by the spread of COVID-19, and therefore, leading to a larger budget deficit than the projected 7.5% of GDP, ultimately creating uncertainty in the interest rate environment as additional borrowing from the domestic market will be required to plug in the deficit,” Cytonn states.

Currently, the economy of Kenya seems to be thriving on the wheels of debts as the government of Jubilee massively borrows to keep its projects running. There have been concerns, however, of the amount of money that is lost to corruption. It is estimated that at least a third of the Kenyan budget goes to pockets of individuals through corruption.

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