T-Bonds on a new one-and-a-half year high with uptake from heavy investors

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Data from the CBK has revealed an over-subscription of Sh105.14 billion in its five and 10-year Treasury bond sale, expecting Sh40 billion. The bidding comes amidst a backdrop of a huge liquidity market.

According to CBK, last week’s auction also sets a new target surpassing papers offered In January 2019. In the bidding, investors over surpassed with subscription hitting Sh101.97 billion in the two-and 15-year bonds.

The auction result to the tune of Sh105.14 billion has had the CBK only taking up Sh49.32 billion of the offered funds. This means Treasury gets to achieve the Sh390 billion for this fiscal year domestic borrowing target and its 2015 five-year bonds worth Sh30.96 billion.

KCB Capital Analysts further indicate the oversubscription was made possible due to preference for short bond papers amid the interest rate uncertainty.

“It is likely that CBK will have the ability to plug some of the raised cash from the domestic debt market into budgetary support as we expect CBK to raise more funds from the targeted issues due to high liquidity and a great appetite for short-term papers.”

In the sale last week, the Sh45.2 billion was invested cumulatively within three tenors surpassing the Sh24 billion set target.

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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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