Central Bank of Kenya re-opens two bonds

Tuesday, June 9th, 2020 00:00 |
Central Bank of Kenya. Photo/PD/File

Zachary Ochuodho @zachuodho

Treasury has re-opened its five-year and 10-year bonds issued in 2019 under the FXD3/2019/5 and FXD4/2019/10 respectively, to raise Sh40 billion in support of the Budget.

In a public notice, the Central Bank of Kenya (CBK), said the price for the new issue would be market-determined.

Investors for the five-year bond will receive a 11.49 per cent yield while the 10-year bond will attract a 12.28 per cent yield on the reopened bonds.

The bonds were put on sale on June 4, this year and will run-up to June 16. Investors are expected to pay by June 16, with maximum investment set at Sh20 million per every Central Depository Settlement account.

Eligible investors

However, State entities, public universities and semi-autonomous government agencies can buy more.

The bond will be listed on the Nairobi Securities Exchange (NSE) and only investors with active CDS accounts are eligible.

Secondary trading in multiples of Sh50,000 will commence on Wednesday, June 17, 2020.

Licensed placing agents will be paid a commission at the rate of 0.15 per cent of actual sales (at cost ) net of five per cent withholding tax.

CBK will re-discount the bonds as a last resort at three per cent above the prevailing market yield or coupon rate whichever is higher, upon written confirmation to do so from the NSE.

Investors in the new bond will receive the first interest payment on December 14, this year while those putting their money in the reopened debt will get the first interest on June 15.

Last month, the government reopened a 10 and five-year bond worth Sh50 billion placed last year after being under subscribed on low yields of 11.3 and 12.4 per cent respectively.

The government is under pressure to finance the 2019/20 budget deficit cheaply after Treasury’s appetite for expensive external debt was rebuked.

Last month, Treasury issued a six-year infrastructure bond worth Sh26.6 billion whose redemption will be 2023.

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