Kenya raised 318 million U.S. dollars from two 10-year bonds worth 291 million dollars it floated this month to cover end of fiscal year deficit.
The bonds were massively oversubscribed, with data from the Central Bank of Kenya (CBK) Thursday indicating a high appetite from investors.
Both bonds, FXD 3/2008/10 and FXD 1/2009/10, performed exceptionally well but it is the latter that attracted most bids, raising 268 million dollars while the former 211 million dollars.
In total, the bonds raised 479 million dollars with the CBK, however, rejecting 161 million of investors’ bids.
“The weighted average rate for successful bids was 11.3 percent for the FXD3/2008/10 bond and 11.9 percent for the FXD1/2009/10 bond,” said the CBK.
In the last three auctions, the government has rejected expensive bids from investors, given that the domestic borrowing program is ahead of target. Therefore, it is under no pressure to borrow at yields above market.
Analysts, however, noted that the government would extensively borrow from the domestic market towards end of the fiscal year to avoid the lengthy process in external borrowing.
Kenya has in this fiscal year, 2016/2017 borrowed heavily from internal than external sources despite plan to borrow more from the latter to ease pressure on domestic interest rates.
According to the Central Bank, Kenya has so far borrowed 2.3 billion dollars locally this financial year against a target of 1.7 billion dollars.
On the other hand, the government has borrowed some 2 billion dollars of the budgeted foreign borrowing, which was 4.6 billion dollars representing 45 percent of the targeted amount. Enditem