The Central Bank of Kenya (CBK) has reopened the recently
floated two- and 15-year bonds in a bid to raise an extra Sh12 billion.
The
CBK is targeting the liquidity left in the banking system after it took
up Sh38.49 billion from the two issues, out of the Sh101.97 billion
investors offered. That left more than Sh63 billion on the table, which
now constitutes the liquidity the regulator is trying to raise new money
from.
In the reopened bond, the market is to determine
the yield (with the coupon already given) unlike in a tap sale where
the yield and the coupon are predetermined.
Market analysts said in the reopened bond, the CBK is likely to
take only lower yields, indicating that it would be the overall gainer
from the high market liquidity. “From the information we are getting
even from dealers, we are likely to see the CBK going for lower yields
so investors will be buying at a premium,” said Susan Makena, research
analyst at Sterling Capital.
She said the reopening had
given the CBK a bigger leeway unlike in the tap sale, which would have
maintained the returns in the same level.
“The CBK will be taking advantage of the liquidity in the market,” said Ms Makena.
The coupon rate on the two-year paper stands at 10.701 per cent while that on the 15-year bond is at 12.857 per cent.
Withholding
tax on the two-year is set at 15 per cent while that on the 15-year is
set at 10 per cent, with a view to encouraging investment in the
long-term securities.
The bond went on sale from
January 29 and closes on February 5. Payment for the accepted amount
must be done by 2pm on February 11.
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