Kenya has put up for sale two Treasury bonds worth 398 million U.S. dollars as the government raises internal borrowing to fund activities including polls, infrastructure development and pay rise for teachers and civil servants.
The amount, which is 107 million dollars higher than the money normally raised every month, is the largest to be ever sought through the paper by the East African nation.
The two bonds, FXD2/2010/10 and FXD1/2009/15 will be auctioned on May 22 at the Central Bank of Kenya (CBK) and will later be listed at the Nairobi Securities Exchange’s secondary market from May 23.
“The Central Bank, acting as a fiscal agent for the Republic of Kenya, is offering the investing public an opportunity to invest in two fixed coupon Treasury bonds for budgetary support,” said the apex bank in a prospectus Monday.
Interest rate on the long-term papers has been set at 9.3 percent for the 10-year bond and 12.5 percent for the 15-year bond.
Analysts expected the bonds to be heavily over-subscribed due to high liquidity in the market and have recommended bids of between 12.5 percent and 13 percent for the 10-year paper and 13 percent and 13.9 percent for the 15-year paper.
The last two Treasury bills auctions saw the papers over-perform, with the auction on May 5 attracting a record 457 million dollars in bids as liquidity remained high amid increased appetite from banks.
The Kenya government is ahead of its domestic borrowing, having borrowed 3 billion dollars against a target of 2.5 billion dollars mainly for budgetary support.
Kenya’s domestic debt rose by 1.1 billion dollars in two months to April, gravitating closer to 20 billion dollars as the government intensifies domestic borrowing to fund key activities. Enditem