Treasury seeks Sh50bn in September bond sale

The Treasury has opened the sale of a three-tenor Treasury bond issue for September seeking Sh50 billion for budgetary support.

The Central Bank of Kenya (CBK) said that the government is reopening a 15-year paper first sold in 2010, a 20-year paper first sold in 2011 and a 15-year bond whose initial sale was in February this year.

The offer opened on August 31 and will run until September 15.

“CBK, acting in its capacity as fiscal agent for the Republic of Kenya, invites bids for the above bonds…of amount Sh50 billion, and purpose (being) budgetary support,” said CBK in the prospectus for the bond issue.

This is the second three-tenor bond issue to be laid out by the government in the current fiscal year, following a similar sale in July.

CBK governor Patrick Njoroge said in a briefing in July that the triple-tenor bond sales are meant to make the issuances attractive to all investors, given that they have different preferences in terms of investment duration.

For instance, banks prefer shorter dated paper, while pension funds and insurance firms go for longer dated bonds.

The three re-opened bonds have 5.3 years to maturity for the 2010 paper, 10.7 years for the 2011 paper and 14.5 years for the 2020 paper.

They carry coupon rates of nine percent for the 2010 15-year offering, 10 per cent for the 2011 20-year bond and 12.76 per cent for the February 2020 15-year reopening.

The bonds market has proved to be a fertile ground for the government in the current fiscal year as it looks to fill a Sh494 billion borrowing target from the domestic market.

The government has so far taken up Sh200.5 billion from the Treasury bonds floated in the market in the current fiscal year, helped by a liquid money market and a lack of viable investment alternatives in the economy.