Central Bank of Kenya(CBK) received bids worth KSh 84.2 Billion at the November Treasury Bonds sale out of the KSh 50 Billion that was offered with the CBK accepting KSh 69.5 Billion, representing an oversubscription of 168.34%.
Out of the amount accepted, KSh 49.1 Billion was made up of competitive bids while KSh 4.5 Billion were non-competitive bids.
The November Tap sale was comprised of a new 5-year and re-opened 20-year fixed coupon Treasury Bonds.
CBK PROSPECTUS
According to the CBK prospectus, the re-opened 20-year T-Bond was first issued in 2019 and attracted a fixed coupon rate of 12.873% while that of the 5-year T-Bond is market-determined.
The period of sale was between 25th October 2021 and 9th November 2021 with the value date on 15th November 2021, while the auction date was 10th November 2021.
The redemption date for the 5-year T-bond is 9th November 2026 while that of the 20 -year Treasury Bond is 21st March 2039.
Secondary trading of these bonds, which have been listed at the Nairobi Securities Exchange(NSE) will commence on Tuesday, 16th November 2021.
According to a weekly fixed income note from AIBAXYS Africa Research, the shorter-term paper, FXD1/2021/5, received the highest bids at KSh 66.60Billion. This T-Bond was issued at par with both the Coupon rate and the yield coming in at 11.28%.
The 20-year T-Bills recorded a coupon rate of 12.87% and a yield of 13.41%.
At the end of last week in the secondary bonds market, the value of bonds traded increased by 37.94% to KSh 18.65 Billion from KSh 13.52 Billion recorded the previous week.
On a year-to-date basis, the yield curve has readjusted upwards in the mid-range but held steady in the short and long end of the curve.
“We expect activity in the secondary bond market to be driven by investors hunting for higher yields and attractive entry points on some specific papers. Continued borrowing by the government is likely to exert upward pressure on the yield curve,” said a fixed income note from AIBAXYS Africa Research
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