Central Bank of Kenya(CBK), the state fiscal agent, received bids worth KSh 43.1 billion at the May 2022 primary Treasury Bonds Auction, out of KSh 60 billion on offer.
This represents a performance rate of 71.86%, with the CBK accepting bids worth KSh 31.7 billion and rejecting bids worth KSh 11.4 billion at this auction, which took place on Wednesday this week.
CBK received most subscriptions on the 10-year treasury bond
The most attractive debt instrument was the 10-year Treasury Bond which received bids worth KSh 32.9 billion, with the state fiscal agent accepting bids worth KSh 28.7 billion.
The 25-year Treasury bonds received bids worth KSh 10.2 billion, a performance rate of 17.04%, with bids worth KSh 3.1 billion at this auction.
The coupon rate for the 10-year Treasury bond was 13.490%, while that for the 25-year Treasury bond was 13.924%.
In the May 2022 primary bond auction, the National Treasury sought to raise KSh 60.0 billion by issuing a new fixed-rate 10-year t-bonds and a reopened 25-year t-bonds, first sold last year.
The quantum sought in May is marginally lower than in the April 2022 auction by KSH 10.0billion.
This month’s longer-dated papers on sale point to the Government’s attempt to lengthen the public debt maturity profile. Currently, the average tenor to maturity of outstanding fixed-rate bonds segment is approximately 7.61 years down from 7.63 years.
Analysts believe the slight drop in average tenor to maturity is due to the issuance of the 3-year bond; in April 2022.
The primary bond sale comes against a shortage in Treasury bill maturities. As usual, proceeds from the auction could go towards refinancing upcoming maturities.
CBK figures indicate that maturities and coupon payments amounting to approximately KSh 140.0 billion are due in May 2022.