Investors oversubscribed to the 2-year bond issued by Central Bank in the first week of January.
CBK issued a 15-year bond and a 2-year bond both worth Ksh40 billion. The 2 year bond received bids worth Ksh76.9 billion (192 per cent subscription rate) while the 15 year bond got bids worth Kshh25.1 billion (62 per cent subscription rate).
Given the high appetite for short term bonds, and increased liquidity in the market, oversubscription on the 2-year bond was expected.
In similar fashion, treasury bills were oversubscribed with bids worth Ksh139 billion received in January 2019. The high demand for short term government bonds is good news for Kenya’s treasury which aims to close the budget deficit gap through a mix of domestic and external borrowing.
Out of the Ksh40 billion the government wished to raise in its latest auction, it accepted bids worth Ksh38.494 billion. The government will pay 10.7 per cent interest on the 2-year bond and 12.86 per cent on the 15-year bond.