The debut domestic bond buyback by the Central Bank of Kenya (CBK) has met its target, buying back bonds worth KSh 50.09 billion against a targeted KSh 50 billion.
- •The CBK announced the first ever domestic bond buyback in February, where investors sold back three bond issues worth KSh 50 billion before their intended maturity.
- •The buyback, which targeted three bonds, seeks to ease refinancing pressures in mid-2025 when the bonds are expected to mature.
- •The total value of the three bonds was KSh 185.1 billion comprising the 3-year paper to mature in April 2025, the 5-year paper and the 9-year infrastructure bond to mature in May.
This comes amid the government’s move to raise the domestic borrowing target for the 2024/25 fiscal year to KSh 582.7 billion from KSh 413.1 billion further exerting pressure on the domestic market.
Demand was skewed to the 5-year paper, which attracted offers worth KSh 40.1 billion with the 3-year paper receiving offers worth KSh 10.3 billion. The 9-year infrastructure bond received bids worth KSh 5.7 billion with an 11.48% performance rate. Collectively, the buyback attracted bids worth KSh 56.1 billion with CBK accepting KSh 50.1 billion.
According to CBK, investors were paid based on the buyback price per KSh 100 at an average yield. The government paid KSh 103.9422 for the 5-year paper inclusive of a 3.43 accrued interest. With a similar accrued interest, the 9-year infrastructure bond returned KSh 104.1433 while the 3-year paper yielded 104.6775 with an accrued interest of 4.3638.
The April-May maturities targeted in the buyback have been cut down to KSh 135.1 billion. Last week, the two reopened February infrastructure bonds were oversubscribed, with the government raising KSh 130.8 billion against a KSh 70 billion target as proceeds from the tax free IFBs financed the buyback.
