The National Treasury building in Nairobi. PHOTO | FILE
The Treasury has opened a tap sale for this month’s 12-year
infrastructure bond, seeking an additional
Sh24 billion from the issue.
Sh24 billion from the issue.
The
move by Treasury was widely expected by players in the money market,
given that the CBK had only taken up Sh6 billion in the initial sale out
of offers of Sh35 billion last week’s initial sale.
The bond is targeting Sh30 billion to go towards funding of infrastructure projects in roads, energy and water sectors.
The
tap sale closes on Thursday—or earlier if the target amount is
achieved— with bids priced at 13.55 per cent, being the rate for the
accepted offers in the initial sale.
“Bids shall be
priced at the weighted average rate of the accepted bids for the initial
bond auction and adjusted for accrued interest,” CBK said in a notice
on Tuesday.
Analysts expected the move to return to the
market for a tap sale, given that the government is under pressure to
meet its budgetary commitments with both domestic and foreign borrowing
so far behind target for the fiscal year.
The Kenya
Revenue Authority (KRA) has also missed its first half of 2016/2017
financial year revenue collection target by 3.2 per cent and is expected
to miss its overall revenue collection target of Sh1.5 trillion for the
current financial year.
“We (therefore) expect the
government to come under pressure to borrow from the domestic market to
meet the high level of debt maturities, which may result into an upward
pressure on interest rates,” said Cytonn Investments in a weekly note.
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