Investors bid Ksh.65 billion in June bonds

Investors offered more than twice the amount on offer in June Treasury bonds as high appetites for government securities re-emerge.

Total bids received for the Ksh.30 billion on offer stood at Ksh.64.9 billion to represent a 216.4 per cent performance rate for the re-opened 25-year Treasury bonds (T-bonds).

Investor bids were concentrated on the recent FXD1/2019/20, which matures in 2039, receiving the majority Ksh.41 billion of subscriptions.

Nevertheless, the Central Bank of Kenya (CBK) cut out Ksh.45.2 billion of the offers by only accepting Ksh.19.7 billion.

The high rejection rate is likely reflective of CBK’s containment of aggressive bidding by investors.

Nevertheless, yields on the dual-papers exceeded the bond’s coupon rates of 12.873 and 12 per cent at 13.261 and 12.498 per cent respectively.

The high rejection rate on investor bids comes as the exchequer eases through its local borrowing program to June 30 as the government marks abundant liquidity from the heavy appetites.

In May, the CBK rejected Ksh.22.3 billion as it further sought to put off aggressive bidders.

Traditionally, the reserve bank has followed a low acceptance rate on bonds with a secondary offer (tap-sale).

The government has successfully met its financing needs while deploying its Treasury tool to manage liquidity in the financial markets.