Treasury misses Ksh.50B target on February bonds as investor funds dry up

The National Treasury has missed its target of raising Ksh.50 billion from bonds in February on tightening liquidity in the financial markets.

The exchequer saw investor bids fall shy of the mark at Ksh.41.9 billion representing an 83.7 per cent performance rate and accepted Ksh.32.1 billion of the booked bids.

Further, investors demanded a greater return from the bonds with the weighted average rate of accepted bids sitting at 11.78 and 12.69 per cent respectively against coupon rates of 11.25 and 12 per cent.

Analysts have tied the low subscription rates to liquidity tightening after heavy investor bids last month when the Treasury traded its first infrastructure bond for the year.

“We hold a view that the infrastructure bond issuance played a major role in mopping the excess liquidity that was salient at the start of the year,” said analysts at Genghis Capital.

Across January, the National Treasury scooped Ksh.137 billion from the domestic debt market with investors registering heavy appetites on the attractive bond issuances.

The heavy subscriptions however served to tighten liquidity in the financial markets with the inter-bank lending rate rising by nearly one percent in the past week to 5.56 per cent.

The National Treasury has been tipped to issue a tap sale to normalize its domestic borrowing trajectory on the back of the missed targets.