The Central Bank of Kenya (CBK) has
continued a trend of rejecting expensive money in primary security
sales, keeping interest rates on this month’s government bond auction
down.
This is despite the pressure on the Treasury to increase borrowing in the last two months of the fiscal year.
CBK
took up Sh19.9 billion out of the Sh38.8 billion investors offered in
this months sale of reopened 10 and 15-year bonds, which had a target of
Sh40 billion.
This is even as the government remains
behind schedule in its domestic borrowing target of Sh280 billion for
the fiscal year, having taken up a net of Sh178.6 billion (64 per cent)
by the end of last month.
“With two months remaining in
the current financial year coupled with the anticipated Supplementary
Budget estimates to tame the runaway essential food costs, the
government finds itself with a herculean task of plugging the current
budget deficit,” Genghis Capital analyst Churchill Ogutu.
“Notably,
this is the third consecutive double-bond re-opening issuance and it is
not entirely lost that the CBK is intent on clamping against
aggressive yield bidding. We be believe the most likely scenario...is
the CBK will come back to the market for a tap sale.”
The
rate of accepted bids stood at 12.47 per cent for the 10-year paper,
against an average of 12.6 per cent on offers, while that of the 15-year
was 13.1 per cent against an offer average of 13.35 per cent.
Analysts had projected the bid rate on the 10-year
paper to fall between 12.5 and 12.8 per cent, and that on the 15-year to
come in between 13 and 13.55 per cent.
The two reopened bonds mature in 2020 an
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