The government has returned to the market seeking an additional KSh 15 billion in a tapsale of the August Issue which raised KSh 29.5 billion against the KSh 50 billion on offer.
The tapsale runs from Tuesday 20th August to Thursday 29th August 2024 according to a prospectus published by the Central Bank of Kenya (CBK).
The August auction consisted of two 17 year and 6.5 year bond reopenings with remaining time to maturity of 5.8 years and 15.7 years.
The IFB/2023/17 tapsale has a 14.3990 coupon rate offering a 17.7279 percent return upon clocking the targeted amount.
Notably, licensed placing agents will not be paid commission from 2nd September 2024.
The IFB1/2023/17 was first issued in March 2023 receiving bids worth KSh 59.8 billion relative to the KSh 50 billion on offer. This was followed by two subsequent tapsales within five weeks which remained undersubscribed. It was later reopened in July 2024 for the August auction which closed last week, recording an under subscription of 58.9 percent.
A Tap sale is a procedure where the treasury opens the sale of bonds that had already been issued in the past. The bonds are issued at their original face value, maturity, and coupon rate but are sold at the current market price. Normally a tap sale is issued when a bond has underperformed hence not meeting the initial capital target set by the treasury.
With bulk investors exhibiting preference on the short term papers, the CBK ought to incline towards the longer dated papers.
The state is looking to borrow a net of KSh 413 billion from the domestic market in the current fiscal year according to CBK disclosures.
