This archive report was first published on 24 November 2019.
On November 24, 2019, the Central Bank of Kenya (CBK) issued a 10-year bond, but investors snubbed it in a rare event, raising only Sh38.37 billion out of the targeted Sh50 billion.
The Treasury's fiscal agent accepted Sh28.35 billion of the bond, which will be used to bridge the budget deficit.
Investors who bought the bond will receive a coupon of 12.28 percent, the weighted average of accepted bonds.
Analysts had expected a healthy demand for the bond due to its relatively short tenor and the shortage of such issues in recent months.
However, the bond's underperformance bucked these expectations, with some investors choosing to remain on the sidelines due to uncertainty over interest rates.
“Being the first primary auction in a post-rate cap repeal environment, the issue of pricing was expected to be a grey area,” said Genghis Capital senior analyst Churchill Ogutu.
“The pricing of last month's primary sent mixed signals to the market. Ordinarily, market determined pricing has been a given to be the weighted average rate of accepted bids. This wasn't the case in last month's results as the eventual coupon was at a discount of the average accepted bids sending jumbled message in the market,” Ogutu added.
