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Central Bank of Kenya (CBK) has re-opened two 15 year bonds and a 25-year fixed coupon treasury bond as it seeks to collect Sh60 billion next month.

Apart from the 15-year bonds that were previously sold in 2013 and 2019, it is the first time the 25-year fixed coupon treasury bond is being floated. CBK said on its website money obtained from the sale will be used for budgetary support.

In addition to budgetary support, Marshel Nyangor, a financial analyst said the government was using the bonds to mop excess liquidity in the market.

“Two weeks ago the government floated an infrastructure bond. Because the market was overflooded and so much money was turned away,” he said, in addition to borrowing internally to sustain its activities.

So far, treasury has raided the domestic market, borrowing Sh278 billion against a target of Sh658.8 billion for the fiscal year ending June 2022.

Through the infrastructure bond, the government raised Sh106 billion. 

Coupon rate

CBK says secondary trading will start on October 12, 2021, in multiples of Sh50,000.

The coupon rate for the 15-year Treasury Bonds is 11.250 per cent and 12.340 per cent respectively while the 25 year Treasury ‘coupon rate has been pegged at 13.924 per cent.

Duly completed bond application forms must be submitted to any branch of the CBK by Tuesday, October 5, 2021 while the auction has been slated for the following day.

The industry regulator says licensed placing agents will be paid a commission of 0.15 per cent at cost net of 5 per cent withholding tax.