Treasury raises Sh62.2bn from three bond auctions

The Treasury has raised a cumulative Sh62.2 billion from the auction of three bonds, taking in slightly more than its target of Sh60 billion.

The government’s fiscal agent, the Central Bank of Kenya (CBK), said the re-opened 10-year bond raised Sh7.3 billion while the re-opened 20-year bond brought in Sh27.5 billion.

Investors had bid Sh10.4 billion on the 10-year bond and Sh27.9 billion on the 20-year paper. The CBK rejected nearly half of the bids on the 10-year security, indicating that investors had sought returns significantly above what the agency was willing to pay.

The results of the two bonds were published yesterday and add to the performance of the re-opened five-year security, which raised Sh27.4 billion and whose results came in on January 5.

The 10-year security, which has seven years to maturity, will pay investors an average interest rate of 12.56 percent in the latest auction.

The 20-year paper that will be redeemed in 19.7 years will pay bondholders an average interest rate of 13.79 percent.

The five-year security has 3.4 years to maturity and had an average interest rate of 11.23 percent.

Government bonds have emerged as the best-performing asset class in the wake of the Covid-19 pandemic, drawing strong investor participation in the primary auctions as well as the secondary trading market.

Bond transactions at the Nairobi Securities Exchange rose to a record of Sh956 billion in the year ended December, the bourse operator said.

Retail traders in bonds — comprising savings and credit cooperatives, listed and private companies, self-help groups, educational institutions, religious institutions and individuals — raised their holdings of the securities by Sh99 billion to Sh248.4 billion during the year.