This archive report was first published on 17 June 2020.
Investors are expected to flock to this week's Treasury bond issue, with analysts predicting a high uptake due to the current high liquidity in the market.
The Treasury is seeking to raise Sh40 billion through a five and 10-year dual tranche budgetary support bond, which is the last of the fiscal year and concludes on Wednesday.
Analysts at KCB Capital, AIB Capital, and Genghis Capital have noted that demand for the five-year tranche is likely to be elevated, with interest rate uncertainty still affecting the market amid the negative effects of the Covid-19 outbreak.
Additionally, the market remains liquid due to government payments as the fiscal year ends, with banks holding on to Sh32.8 billion in excess reserves above the 4.25 percent statutory cash reserves requirement.
According to KCB Capital analyst Mercyline Gatebi, 'We anticipate the five-year paper to record a higher subscription than the 10-year paper based on the investors' objectives; mainly attracted by short-term papers and constitute the majority of the government securities' investors.'
Churchill Ogutu, head of research at Genghis Capital, added that 'With the upcoming maturity of the five-year bond issued in 2015 (amount outstanding Sh30.96 billion), we are of the view most of the bond proceeds will be to redeem the bond.'
