The National Treasury is in the market seeking to raise Sh60 billion domestically to go towards budgetary support. 

Central Bank of Kenya (CBK) has reopened a 10- year and 20-year bonds and floated a new 20-year fixed coupon Treasury bond in the new move.

“Central Bank of Kenya, acting in its capacity as the fiscal agent for the republic of Kenya invites bids for the above bonds,” said CBK in a statement.

The sale will run between July 26 and August 10 this year with the auction date set for August 11.

The redemption date for the bonds will be August 6 2029, March 1 2038 and July 22 2041 for the three bonds respectively.

In a statement, CBK said duly completed bond application forms for the multi-price bid auction should be submitted to any Central Bank of Kenya branch or by August 10.

Market yield

“The Central Bank of Kenya will rediscount the bonds as last resort at three per cent above prevailing market yield or coupon rate whichever is higher, upon written confirmation to do so by the Nairobi Securities Exchange,” reads the statement in part. 

This financial year, Treasury will be seeking to raise Sh3.6 trillion from both internal and external sources to go towards funding the budget, Kenya’s largest ever.

Treasury, however, has an arduous task raising close to Sh1 trillion budget deficit, mostly from loans. 

Churchill Ogutu, the head of research at Genghis Capital said the Sh60 billion budget support was pre-empted in the budget and is part of what Treasury said it planned to borrow locally during the budget presentation in June.

 “What the budget targets for the current financial year, there is a target for domestic borrowing.

It is upon CBK as the fiscal agent to see which bond or target amount will ensure that Treasury attains the target of Sh658.5 billion,” he said.

In the recent past, Treasury has faced an uproar over the soaring debt in the country with economic analysts warning it was no longer sustainable. 

In its weekly bulletin released last Friday, Central Bank of Kenya said the country’s public debt now stands at Sh7.7 trillion as of June this year.

Of the amount, Sh4 trillion is external debt while domestic debt stands at Sh3.7 trillion.

Of the Sh3.6 trillion budget, Sh1.3 trillion will go to recurrent expenditure, Sh1.3 trillion to the Consolidated Fund Services (CFS) and Sh666.5 billion to development expenditure.