Kenyan Investors Rush To Buy Into Bonds Issued In January

Investors rushed to buy into the bonds issued by the Central Bank of Kenya during the month of January according to stats compiled by the Cytonn Investments.

The Central Bank of Kenya issued two bonds, FXD1/2021/002 and IFB1/2021/016, having effective tenors 2 years and 16 years and with coupons of 9.5 and 12.3 percent respectively.

The two issues recorded high demand, with the overall subscription rate coming in at 244.6 and 250.7 percent respectively, mainly supported by the attractive tax-free nature of the infrastructure bond and improved liquidity in the market.

In total, the government received bids worth 186.4 billion shillings 2.5x higher than the 75.0 billion shillings offered, and accepted only 137.0 billion shillings. The government hopes to capitalize on the bonds to cut down on its appetite for loans.

For the month of February, the government is seeking to raise 50.0 billion shillings for budgetary support by reopening two bonds, FXD1/2013/15 and FXD1/2012/20, with a time to maturity of 7.1 and 11.8 years, respectively.

The bonds have coupons of 11.3 and 12.0 percent and are currently trading at a rate of 11.4 and 12.3 percent, respectively in the secondary market.

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“Given the increased liquidity in the market coupled with the government’s increased appetite for domestic borrowing to bridge the budget deficit, we anticipate an oversubscription and a higher acceptance rate,” said Cytonn in their report.

“The bonds will be on offer from 26/01/2021 to 08/02/2021 and we advise the investors to bid at 11.9.0- 12.2 percent for FXD1/2013/15 and 12.5%-12.9% for FXD1/2012/20,” they added.

In the Month of January, the yields on government securities in the secondary market remained relatively stable while the bond turnover declined by 17.5 percent to 45.5 billion shillings, from 55.2 billion shillings recorded in December.

The FTSE NSE bond index remained unchanged at 98.0 recordings a return of 0.0 percent on YTD.

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