Central Bank of Kenya
Genghis Capital

15-year tenor primary bond set for listing at the NSE tomorrow

The May 15-year tenor primary bond that attracted less than the intended amount at Sh20.21 billion out of the Sh40 billion is set to be listed tomorrow.

“The 15-year tenor received bids worth Sh20.21 billion with Central Bank of Kenya (CBK) accepting Sh12.86 billion, a performance rate of 50.54 per cent,” CBK said in a notice.

They said the results fall within market expectations. The Treasury opted for the longer-term maturity bond mainly to lengthen the debt maturity profile, generally deemed a prudent measure.

Prior to the issue, market expectation was that an additional short-term paper would be on offer, which led to sell-off of shorter-duration bonds.

The shorter-term bonds had been employed by banks mainly for asset-liability management. In addition, the current environment has been marked by a reduction in duration as a number of pension funds have increased their appetite for medium-term papers.

As at May 18, cumulative net domestic borrowing in the current financial year was at Sh297.99 billion against a pro-rated Sh269.32 billion target.

“We view that with borrowing which is ahead of its schedule coupled with the proposed reduction in development expenditure in the supplementary budget, the government is under no borrowing duress at this point of the financial year,” said analysts at Genghis Capital in a note to investors.

The bond’s yield at the auction was at 13.078 per cent. Treasury bonds with the same tenor are currently trading in the secondary market at a yield of 13.0 per cent.

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