Kenya floats 297 mln USD T-bond as it snubs costly funds

Kenya has floated 297 million U.S. dollars Treasury bond for budgetary support even as Treasury snubs costly funds from short-term papers amid low subscription.

The 15-year bond, which is up for sale for the next 12 days at the Central Bank, will later be listed at the Nairobi Securities Exchange's secondary market from the end of this month.

"The Central Bank, acting in its capacity as a fiscal agent for the Republic of Kenya, is offering the investing public an opportunity to invest in a 15-year fixed coupon Treasury bond, whose purpose is budgetary support," said the apex bank in a prospectus Friday.

Interest rate on the bond, which is the first to be floated this year, has been set at 13 percent, and is subject to withholding tax of 10 percent.

The yield is higher than those of the 91-day, 182-day and 364-day papers, which ranges from 8 percent to 11 percent.

The 15-year bond follows another of a similar amount that was sold late last month, which raised 350 million dollars at 12.5 percent. Treasury accepted a paltry 110 million dollars from investors.

It did the same in this week's auction of the 182-day and 364 day Treasury bills, which were under-subscribed.

Despite seeking 118 million dollars from the two papers, 59 million from each, and receiving 56 million dollars and 29 million dollars respectively, Treasury accepted only 15 million dollars and 13 million dollars from the securities.

Analysts at Cytonn, a Nairobi-based investment firm, reckon that Treasury is rejecting the bids because the government is ahead of its domestic borrowing for this fiscal year, having borrowed 1.7 billion dollars against a target of 1.2 billion dollars. Endit