Treasury raises Ksh.21 billion from May bond sale

The National Treasury has raised Ksh.20.8 billion in new borrowing from its five-year bond sale whose auction was completed Tuesday.

The sale managed to attract bids totalling to Ksh.34.5 billion against a target of Ksh.50 billion to represent a 69 percent performance rate.

Investors continued to show their attraction to short ended paper amid interest rate uncertainities resulting from Covid-19 led volatility with the Central Bank of Kenya (CBK) likewise following the trend with shorter maturity issues.

Analysts had expected an oversubscription to the issue but the auction fell short of the mark driven in part by a short window of sale which run from April 29 to May 5.

“Investors’ focus remains on the short end of the yield curve: In the current market environment where concerns over the spread of corona virus remains elevated and interest rate uncertainty prevail, investors are likely to focus on the shorter end of the yield curve,” noted researchers at AIB Capital.

CBK continued its rejection policy on aggressive bidding from investors shelving away Ksh.13.7 billion worth of bids made in the early May auction.

The average yield on accepted bids remained attractive for the Treasury at 11.67 percent to mirror coupon on recently issued five-year issues listed on the Nairobi Securities Exchange (NSE) secondary bond market.

Analysts predict a tap sale on the issue later in the month as government moves to net greater investor appetites.

Government will be on a race to catch up on its domestic borrowing targets between now and the end of the fiscal year in June.

Net domestic borrowing in the period is projected at Ksh.337.8 billion according to the recently assented second supplementary budget for the year.