The National Treasury has so far raised Sh36.31 billion for the Sh50 billion infrastructure bond issued last Monday, a 72.62 per cent success rate for Kenya’s longest tenure infrastructure bond.
Data by Central Bank shows that although the bond had an 80.79 per cent subscription rate during the initial issue, Treasury only accepted bids worth Sh27.59 billion at a 12.156 per cent weighted average rate.
This week, the government advertised the balance of Sh22.41 billion through a tap sale, accepting bids worth Sh8.73 billion for the debt facility geared towards infrastructure development.
During Wednesday’s MPC briefing, CBK governor Patrick Njoroge said the 20-year infrastructure bond issued, although not the first of its kind, had the longest tenure.
He said the government would from now on lean more towards issuing similar debt instruments rather than using Eurobond issues to raise funds for infrastructure projects.
“Kenya’s Eurobonds in international markets recorded increase in the yields as at November 22. Yields on the five-year, 10-year ( 2024 ), 10-year ( 2028 ) and 30- year Eurobonds edged up by 52, 26, 47 and 23 basis points, respectively,” CBK said in its weekly review released on Monday.
Njoroge noted that Kenyans living abroad were increasing their investment in local Treasury bonds through remittance, especially in the recently issued infrastructure bond.
Diaspora inflows grew 18 per cent to $219 million (Sh22.47 billion) compared to the same period last year. Since January Kenyans living abroad have sent home $2.23 billion (Sh228.79 billion).
This is a 42.46 per cent growth in foreign cash inflows recorded over the same period in 2017.
Over the year, investor sentiment in domestic bond issues has been significantly low attributed to a wait-and-see attitude adopted before the rate cap was retained under the Finance Act 2018.
“The risk investors feared is once the rate cap was repealed, interest on the government securities would increase but this has not been the case,” Cytonn Investments analyst Caleb Mugendi told the Star.
Treasury has been floating at least Sh40 billion bonds every month since December last year, with both external and domestic debt at par at Sh2.56 and Sh2.48 trillion as at June 2018. The government has so far accepted bids worth Sh230.83 billion in Treasury bonds auctioned by the Central Bank of Kenya in 10 months.