Central bank seeks 50 billion shillings on two reopened bonds

Capital markets

Central bank seeks 50 billion shillings on two reopened bonds


The Central Bank of Kenya, Nairobi, Wednesday, December 30, 2020. PHOTO | DENNIS ONSONGO | NMG

The Central Bank of Kenya (CBK) has reopened two long-term bonds aiming to raise 50 billion shillings from fixed income investors.

The government’s tax agent is offering a 15-year security, which was first sold in April at an average interest rate of 13.94%.

A 10-year paper, which was auctioned in May at an average interest rate of 13.49%, is also on offer.

The securities are on sale until September 13, the closing date of the auction period. The bond reopening comes at a time when fixed income investors have demanded higher rates in response to rising inflation, forcing the CBK to reject some of the more aggressive offers.

The 15-year paper raised 27.6 billion shillings in the April auction, falling short of the 30 billion shilling target.

The bond had received offers of 32.5 billion shillings on the security, with the CBK rejecting 4.9 billion shillings of the amounts offered. The 13.94% coupon on paper is the most lucrative among outstanding 15-year bonds in terms of the interest rate fixed in the primary market.

The reopened 10-year bond raised 28.6 billion shillings in May, after receiving bids worth 32.8 billion shillings. The CBK rejected 4.2 billion shillings of the amounts that investors were willing to invest in the newspaper.

Major investors in Treasuries pushed for higher rates amid rising inflation and a weakening shilling against major global currencies.

Institutional investors led by banks, pension funds and insurers usually state the interest they want to receive, while most retail investors usually settle for the market average.

Analysts say rising inflation around the world has prompted investors to seek higher rates in their fixed income portfolios.

“The current high global and local inflation is driving investors to seek better real returns by placing aggressive bids to offset rising inflation,” AIB AXYS Africa analyst Solomon Kariuki said in a recent note. market information.

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