This archive report was first published on 1 October 2019.
On October 1, the Central Bank of Kenya (CBK) announced a tap sale for the September bond issue, aiming to raise an additional Sh30 billion from the market.
The initial sale in September raised Sh32.6 billion at a rate of 12.5 and 12.6 percent for the two 15-year bonds, which sought to raise Sh50 billion.
Investors undersubscribed the initial sale due to tight liquidity resulting from the Central Bank's aggressive mop-up, forcing the CBK to take up the entire Sh32.6 billion offered.
This move was partly informed by the high Treasury bond maturities worth Sh46.2 billion during the month, which needed to be rolled over.
As a result, the government made net bond repayments of Sh13.6 billion last month, which they are trying to claw back through the tap sale.
Stanbic regional economist Jibran Qureishi noted that the two bonds are long-term and typically do not attract a lot of attention, but the fact that they took all the money can be viewed from the fact that they had over Sh40 billion in redemptions.
The Treasury is also keeping an eye on the need to fulfill its domestic borrowing target of Sh300.3 billion for the current fiscal year, which was revised upwards in August by 5.9 percent from the Sh283.5 billion read in the June 13 Budget Statement.
