The CBK Reopens Two Long-Term Treasury Bonds for September

Through our August review of the Treasury Bonds that the Central Bank of Kenya availed to the Kenyan investors, we anticipated more bonds being floated to raise revenue for the government. 

Faced with a deficit of Kshs 11.48 billion after only raising Kshs 38.52 billion out of the Kshs 50 billion from the three bonds sold to the public, the CBK reopened two long-term papers in September to raise money for government budgetary support.

They include a 15-year bond first sold in April at a 13.94% coupon rate and a 10-year bond sold in May at a coupon rate of 13.49%. Currently, the bond interests come as 13.490% for the 10-year one (FXD1/2022/010) and 13.942% for the 15-year one (FXD1/2022/015).

The auction of the two long-term bonds or papers closes on the 13th of September. 

It is important to note that the market has become volatile due to the continual weakening of the Kenyan shilling. Therefore, investors have quoted higher rates in response to suffice the situation. 

Furthermore, inflation has created a rift between rated investors’ bids against CBK rates. Such has always made the CBK fall short of meeting revenue targets from the sale of the bonds. 

For example, the 15-year bond that has been reopened raised KSh27.6 billion in the April auction, dropping off the targeted KSh30 Billion. The reopened 10-year paper, on the other hand, raised Kshs 28.6 Billion in May. The CBK rejected the KShs 4.2 Billion investors wanted willing to inject into the bond.

The analysis of the September bonds is indicative of very lucrative interest rates being offered on the two bonds. Such rates are among the few instances the CBK has offered for long-term bonds; therefore, any investor ought to grab the opportunity. 

Final Note

There is indeed much uncertainty on the market behavior, with inflation, the current political climate, and a weakening shilling staring at the Kenyan economy. The only surety for any investor is to invest in such bonds that are available.

To learn more about how you can invest in these Treasury Bonds through the CBK, you can check out our article about how to invest in Treasury Bonds as a beginner.

You can also find more details of the September 2022 Treasury Bond Prospectus here.