Treasury targets Sh40bn in bond tap sale

Treasury PS Kamau Thugge. FILE PHOTO | NMG 

By JAMES NGUNJIRI

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Summary

• Market analysts expect the 10-year tenor to have a better performance than the 20-year, mainly due to pent-up demand arising from the previous month bond with the regulator having rejected Sh10.5 billion at the primary auction.

The Treasury has re-opened the sale of 10-year and 20-year Treasury bonds for August to tap Sh40 billion from the tenors.

In the respective initial auctions, the 10-year tenor had received 74.56 per cent performance rate, whereas the 20-year paper got 34.65 per cent subscription.

Market analysts expect the 10-year tenor to have a better performance than the 20-year, mainly due to pent-up demand arising from the previous month bond with the regulator having rejected Sh10.5 billion at the primary auction.

They further said the 10-year tenor will be boosted by the reduction in duration in the market, which had been occasioned by the uncertainty surrounding the interest rate controls. “We view the re-opening of the 20-year paper as part of Treasury’s bid to lengthen debt maturity profile to avert refinancing risk in the short-term,” said Churchill Ogutu, a macro-economic and fixed income analyst at investment bank Genghis Capital.

The bonds are to raise cash for budgetary support.

The 10-year tenor is attracting accrued interest of Sh0.976 per Sh100, while the 20-year paper is attracting accrued interest of Sh2.031 per Sh100.