Investors In Rare Bond Snub As Treasury Misses Ksh.20 Billion Target

 

By Kepha Muiruri For Citizen DigitaL

Local investors have marked a rare snub of infrastructure bonds after only bidding Ksh.6.4 billion from June’s IFB tap sale which closed on Thursday.

This to represent a performance rate of just 32 per cent for the extended bond sale which had sought to raise Ksh.20 billion for the exchequer.

The dismal returns are against the attractive 13.742 per cent tax free return offered by the 18-year tenured bond.

The slump in investor bids likely signals a false start for the National Treasury domestic borrowing program for the new 2022-2023 fiscal year.

The National Treasury remains in the market as it seeks to raise Ksh.40 billion from two re-opened bonds which are on sale until July 19.

The two bonds which have time to maturity of 5.8 and 15.3 years each have coupon rates of 12 and 12.75 per cent respectively.

Average yields for accepted bids on the two re-opened bonds are however likely to outstrip the advertised coupon rates as investors demand a premium to hold government securities forcing interest rates upwards.