CBK raises Sh50.2bn from long-term Treasury bonds

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The Central Bank of Kenya (CBK) has raised Sh50.2 billion from the reopening of two long-term Treasury bonds, with investors placing bids worth Sh81.4 billion amid strong demand for government debt.

The auction, which reopened the 12.6-year and 29.6-year Treasury bonds, attracted total bids worth Sh81.4 billion against an amount offered of Sh60 billion. CBK accepted Sh50.2 billion, representing an overall performance rate of 135.68 percent.

The 12.6-year bond, FXD1/2019/020, received bids worth Sh43.8 billion, of which Sh33.46 billion was accepted. Its bid-to-cover ratio stood at 1.31, while the market-weighted average rate was 13.68 percent and the weighted average rate of accepted bids was 13.61 percent.

The longer-dated FXD1/2026/030 bond attracted Sh37.6 billion in bids, with CBK accepting Sh16.72 billion. Demand for the 29.6-year paper was stronger, recording a bid-to-cover ratio of 2.25. The market-weighted average rate stood at 14.47 percent, while the weighted average rate of accepted bids was 14.24 percent.

Of the Sh50.2 billion accepted, Sh30.57 billion came from competitive bids while Sh19.6 billion was from non-competitive bids.

The 12.6-year bond carries a coupon rate of 12.873 percent and matures on March 21, 2039, while the 29.6-year bond has a 12.5 percent coupon and matures on March 13, 2056.

The auction comes as the government continues to rely on domestic borrowing to finance its budget and refinance maturing obligations. The CBK results, however, do not specify the precise application of the funds between redemptions and new borrowing.