The Central Bank of Kenya (CBK), the fiscal agent for the Government of Kenya, is seeking KSh 50 billion from investors through a ten-year bond.
The purpose of this 10-year Government paper is to support the 2019/20 Budget.
The bond will be on sale between 7th November and 19th November 2019. Discount and Interest on this bond is subject to withholding tax at a rate of 10% with a redemption date of 12th November, 2029.
Duly completed bond application forms must be submitted to any branch of the Central Bank in the specified tender box by 2.00 p.m. on Tuesday, 19th November 2019. The Auction Date is Wednesday, 20/11/2019.
Licensed placing agents will be paid commission at the rate of 0.15% of actual sales (at cost) net of 5% withholding tax.
The Central Bank will rediscount the bond as a last resort at 3% above the prevailing market yield or coupon rate whichever is higher, upon written confirmation to do so from the Nairobi Securities Exchange (NSE).
The bond qualifies for statutory liquidity ratio requirements for Commercial Banks and Non-Bank Financial Institutions as stipulated in the Banking Act CAP 488 of the Laws of Kenya.
The bond will be listed on the Nairobi Securities Exchange and only investors with active CDS Accounts with the Central Bank of Kenya, are eligible.
Secondary trading in multiples of Sh 50,000.00 will commence on Tuesday, 26th November 2019.
Treasury bonds are medium and long-term investments and their maturity can range from one year to 30 years. Investors buying treasury bonds are loaning the government money for a specified period and receive interest payments every six months and at the end of that period, they receive the face value amount that they invested.
