The government has secured Sh47.75 billion from investors after the Central Bank of Kenya accepted bids for two reopened Treasury bonds, surpassing the Sh42 billion it had targeted from the auction.
The CBK received bids worth Sh68.19 billion for the 15-year and 30-year securities, pointing to continued demand for government debt even as investors weighed the returns offered by the two instruments.
The auction had reopened the 15-year Treasury bond FXD3/2019/015, which has nine years remaining before maturity, and the 30-year bond SDB1/2011/030, which has 14 years left to maturity.
The 15-year security attracted the largest share of investor interest, with bids amounting to Sh57.10 billion against an offer of Sh60 billion. This translated to a performance rate of 95.17 per cent.
From the bids submitted for the bond, CBK accepted Sh41.14 billion.
The 30-year security, on the other hand, received bids worth Sh11.09 billion against an offer of Sh6 billion. CBK accepted Sh6.61 billion from the bids, taking its performance rate to 18.49 per cent.
The two bonds therefore brought in a combined Sh47.75 billion, exceeding the total amount initially offered by Sh5.75 billion.
Competitive bids made up a large portion of the accepted funds. For the 15-year bond, competitive investors provided Sh28.91 billion, while non-competitive bids accounted for Sh12.23 billion.
On the 30-year bond, competitive bids stood at Sh3.48 billion, with non-competitive investors contributing about Sh3.13 billion.
The auction recorded bid-to-cover ratios of 1.39 for the 15-year bond and 1.68 for the 30-year security. This means investors submitted bids worth 1.39 times the amount offered for the 15-year bond and 1.68 times the amount available for the 30-year bond.
The market-weighted average rate for the 15-year bond was 12.8290 per cent, while the weighted average rate on accepted bids came to 12.7631 per cent.
For the 30-year bond, the market-weighted average rate was higher at 13.7991 per cent, compared with 13.6937 per cent for accepted bids.
The higher return on the 30-year bond reflects its longer repayment period, with investors seeking a higher yield for keeping their money invested for a longer time.
At the average yield, the price for every Sh100 of the 15-year bond stood at Sh99.5615, while that of the 30-year bond was Sh90.3598.
The 15-year security carries a coupon rate of 12.34 per cent, while the 30-year bond has a coupon rate of 12 per cent.
CBK said the money raised would be used for redemptions and new borrowing, with the transaction resulting in a net repayment.
The latest auction comes as the government continues to rely on the domestic debt market to meet its financing requirements while also dealing with Treasury securities reaching maturity.
The results show stronger demand for the 15-year bond, which accounted for most of the funds accepted by CBK.
CBK said information on upcoming Treasury bond offers, including their maturity periods, amounts, coupon rates and other terms, would be contained in the relevant prospectuses issued before the respective auction dates.