Treasury building in Nairobi.[Photo/Nation]
The Treasury has raised Sh36 billion through an infrastructure bond with interest rate of 12.5 per cent shwoing that the Central Bank of Kenya (CBK) is no mood to accept expensive bids.
The fundraising came through a tap or reopened sale, a second offer for the same bond that saw the Treasury accept only Sh5 billion originally.Liquidity in the market helped the Treasury to get Sh1 billion more than the Sh35 billion sought in the tap sale as widely expected by securities’ dealers and analysts.
This came after an original floating of Sh40 billion that was oversubscribed with Sh55.7 billion put in by investors but at a yield of more than 13 per cent.The authorities were against the expensive bids and only accepted the Sh5 billion in the first offer at about 12.5 per cent.
“The offer was filled with Sh36.21 billion in the two-day sale period — an indication of the attractiveness of the bond albeit the initial massive rejection of the bids,” said Genghis Capital in a note to investors.
The analysts mentioned that the amount of the bids that are beyond the Sh35 billion offer happened after improved liquidity where the average interbank rate dropped and the Treasury bill offers were also oversubscribed.
“The average interbank rate declined 45 basis points to 5.95 per cent in the week…Liquidity condition improved in the week with the CBK keeping off open market operations,” said Genghis Capital.
The analysts stated that the end of the cash crunch will lead to the success of the fixed-income auctions this week.
“We expect the improved liquidity condition in the market will help support T-Bill auction and the short-end bond trading in the coming week,” said Genghis.