Bonds were oversubscribed in February, with the overall oversubscription rate coming in at 412.4%, higher than the undersubscription rate of 90.6% recorded in January 2024.
The newly issued infrastructure bond IFB1/2024/8.5 with a tenor to maturity of 8.5 years received bids worth Kshs 288.7 bn against the offered Kshs 70.0 bn, translating to an oversubscription rate of 412.4%, with the government accepting bids worth Kshs 241.0 bn translating to an acceptance rate of 83.5%.
The weighted average yield of accepted bids and the coupon rate were set at 18.5%, 0.6% points higher than that of the previously issued infrastructure bond IFB1/2023/6.5, whose coupon rate was set at 17.9%.
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In the primary bond market, the government is seeking to raise an additional Kshs 40.0 bn for budgetary support by issuing three fixed coupon treasury bonds concurrently.
FXD1/2024/10, which is a new issue has a tenor to maturity of 10.0 years with a coupon rate of 16.0%, while the re-opened FXD1/2024/03 and FXDI/2024/05 with a tenor to maturity of 2.9 years and 4.4 years, respectively have their coupon rates set at 18.4% and 16.8%.
Additionally, bonds with a similar tenor to the FXD1/2024/10 in the secondary market like the FXD2/2019/015 and the FXD3/2019/015, with a tenor to maturity of 10.1 years and 10.3 years respectively are trading at coupon rates of 12.7% and 12.3% respectively, which is slightly below the new issue.
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The bidding process opened on Tuesday 27th February 2024 and will close on 6th March 2024 for the FXD1/2024/03 and on 20th March for the FXD1/2024/05 and FXD1/2024/10.
The bonds’ value dates will be 11th March 2024 for the FXD1/2024/03 and 25th March 2024 for the FXD1/2024/05 and FXD1/2024/10, with maturity dates of 11th January 2027, 10th August 2028 and 13th March 2034 respectively.
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