Sh18bn Treasury’s target in February bond tap sale

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The Treasury aims at raising an additional sh18Billion in the tap sale of the February bond issue that was undersubscribed.

The Central Bank of Kenya (CBK) stated that the tap sale will open until February 17 with a possibility of being closed earlier if the target has been achieved before the set date.

The initial sale of the bond, which was closed on 2nd February 2021 led to Sh32.12 billion being raised, a shortfall from the target of Sh50 billion.

The dual-tranche bond, comprising of 15-year paper first sold in 2013 and 20-year paper first supplied in 2012, will remit average rates of 11.78 percent and 12.59 percent respectively to its investors.

“We do not anticipate full uptake of the tap sale based on the high concentration around these tenors making them unpopular with investors,” stated analysts at Sterling Capital on 10th February 2021 in a note on the tap sale.

“The CBK has reopened a lot of bonds with a maturity profile of about seven to eight years resulting in a perceived oversupply of the tenors.”

The huge uptake of the 16-year infrastructure bond sale issued in January in which investors bid Sh125.47 billion against a target of Sh50 billion resulted in the underperformance of the February issue.

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Anthony Kiratu is the Founder of Finsolutions. He is a financial analyst with over 5 years experience in research, investment advisory, valuation and financial modelling. Anthony is a member of the Institute of Certified Investment and Financial Analysts and Institute of Certified Public Accountants of Kenya. He is passionate about development of African Capital Markets through training of investors and dissemination of information for sound financial and investment decision making process. He is also a part-time lecturer in the Certified Investment and Financial Analyst course in the subjects of International Finance, Portfolio Management, Equity Investment Analysis, and Fixed Income Securities. Email: anthony@finsolutions.co.ke Contact: +254 780216631

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