Kenya floats 250 mln USD two-week bonds amid rise in uptake

Kenya has floated 248 million U.S. dollars two-week Treasury bonds for budgetary support as demand for the government securities soars with increased uptake from commercial banks.

The financial institutions have shifted to the securities to make up for interest capping introduced in the East African nation by a new law.

The high demand has provided Treasury with a perfect opportunity to sell the two bonds, one which is five-year and another 20-year.

"The Central Bank, acting in its capacity as a fiscal agent for the Republic of Kenya, invites bids for the bonds, whose purpose is budgetary support," said the Central Bank of Kenya (CBK) in a prospectus Tuesday, noting interest for the five-year bond is 15 percent while the 15-year attracts 10 percent.

Uptake of the bonds, which will be listed at the Nairobi Securities Exchange, is expected to be immense if the high demand for the short-term papers currently is anything to go by.

Last week, the CBK offered 91-day Treasury bills worth 39 million dollars. The total number of bids received amounted to 109 million dollars, representing a subscription of over 274 percent. The total bids accepted amounted to 45 million dollars.

Similarly, the CBK put on sale 182 and 364 days bills worth 59 million dollars each. The total number of bids received amounted to 109 million dollars representing a 182 percent subscription and 180 million dollars representing 299 percent subscription for 182 and 364 days, respectively.

Last month, a 250 million dollars bond with a yield of 15 percent attracted bids worth 260 million dollars

Analysts attributed the increased subscription to commercial banks, which according to the Central Bank, have increased their hold on the country's 18 billion dollars domestic debt to 55 percent from 54 percent two week ago before the law on interest capping came into effect. Endit