The treasury has failed to raise Sh50 billion for the five-year bond reflecting the state’s performance in borrowing in the pandemic period among downward adjustment of tax collection.
Data from the Central Bank of Kenya (CBK) highlights bids worth Sh34.53 billion were received, whereas the bond sale collected Sh20.78 billion from investors in the new borrowing.
The bonds were bided at Sh37.84 billion and Sh68.41 billion.
According to Churchill Ogutu, Genghis Capital Senior analyst, the low subscription could be more of a supply problem than a demand problem that might be caused by the short sale period for investors to fill up the bids on offer.
“The under subscription comes as a surprise bearing in mind there is usually heavy demand on suchlike five-year tenors. Then again, the short sale window proved the Achilles heel in this month’s primary bond issue, but we should expect a successful ensuing tap sale,” Said Mr. Ogutu.
“They (CBK) could reopen the 5-year to pick up the balance of 29.3 bn (from Sh50 billion offered) they did not pick,” added Mr Ogutu.
The need to fund the fight against the covid-19, as well as supplementing external borrowing targets, have been the top reasons for Treasuring borrowing.