Treasury collects a lower Ksh.18.3B from December bond sale

The National Treasury has closed the 2020 local borrowing program on a low, tapping Ksh.18.3 from the domestic debt market.

This in comparison to the desired collection of Ksh.40 billion from two bonds on offer during the month.

Investor bids for the two offers cooled down to Ksh.24.3 billion to represent a 60.9 per cent performance rate.

In comparison, the National Treasury had received better tidings across November having raised a surplus Ksh.53.7 billion in contrast to Ksh.40 billion on offer.

The falling subscription on government securities is largely attributable to tighter liquidity and financing conditions in recent week.

The average interbank rate for instance rose by 0.3 per cent in the past week to 3.9 from 3.6 per cent.

The tighter financing conditions has additionally deemed proceeds from the weekly trade Treasury bills (T-bills) with subscriptions over the past two weeks slumping to 64.3 and 45.5 per cent respectively.

In spite of the low subscription by investors, the Central Bank of Kenya (CBK) which conducts the bond sale on behalf of the Treasury has continued to reject expensive bids in an effort to keep low yields on government paper.

The weighted average interest rate for the accepted bids for the two bonds stood at 11.5 and 12.8 per cent respectively slightly above the advertised coupon rates of 11 and 12.7 per cent.

The lumpsum Ksh.18.3 billion from the bonds’ sale covers new borrowing for government.