The government’s bid to raise Sh30.3 billion (US$297 million) from the domestic market for budgetary support fell short of target, with the cash call raising about three quarters of the amount.
The money was to be raised from 15 and 20 years fixed coupon Treasury bonds issued on November 10. Auction statistics from the Central Bank of Kenya (CBK) showed Thursday that the bonds only raised Sh22.3 billion, with most of the money coming from the 15-year bond.
The paper raised 14.6 billion at 13.5 percent interest rate while the 20-year bond attracted bids worth Sh7.7 billion at 14.3 percent. From the amount, the CBK accepted bids worth 20.4 billion.
The bonds yields, however, were lower by 1.3 percent and 0.8 percent respectively from the previous ones issued in June when they were first offered, with analysts citing the low rates for the poor show.
The low uptake defies forecasts from analysts, who had expected the bonds to attract massive interest from investors, especially from commercial banks following the capping of interest rates.
The financial institutions have divested from private sector loans and are investing huge funds in government papers.
“Looking at the top banks, they seem to be shifting their asset allocation in favour of government securities. The bond issues are expected to be attractive to banks,” said analysts in an investor brief on the bonds. (Xinhua)