The Central Bank of Kenya (CBK) is seeking to raise KSh30 billion from two reopened bonds for budgetary support in October sale.
- According to the prospectus, bidding for the 10 year paper’s twin reopening runs to 9th October 2024 whose interest and discount rates are subject to a 10% withholding tax.
- The first paper was first issued in 2016 with a remaining time to maturity of 1.8 years and a coupon rate of 15.039%.
- The other paper has a 13.49% coupon rate having been first issued in 2022 with 7.6 years tenor to maturity.
The bonds will be listed on the NSE’s secondary market, trading in multiples of KShs.50,000 from Monday, 14th October 2024.
The government has been taking up on longer dated papers in a bid to lengthen the debt maturity period with the first longer dated issuance in 2024 being in March.
Rates in the fixed income market have been on an upward trend given the continued high demand for cash by the government from the domestic market coupled with the tightening measures employed by the Central Bank.
The apex bank has been pushing towards lower domestic interest rates in efforts to lower debt costs with investors continuously demanding higher rates.
“The Central Bank of Kenya faces a critical test following its decision to lower the Central Bank Rate to 12.75%. We anticipate a tug-of-war between the CBK’s efforts to moderate yields and investors’ push for higher returns as market participants seek to maximize real yields in the current economic environment,” a research Note by AIB-AXYS noted.
Looming rate cuts across the major economies mirrors the beginning of an easing cycle spilling over to developing nations. The CBK already cut 0.25% in August with investors expecting deeper cuts in the last quarter of 2024 after a series of hikes to a 13.00% peak.
