Central Bank invites investors for KSh40 billion dual-tranche Treasury bond reopening

The Central Bank of Kenya, acting as the fiscal agent for the Republic, has announced the reopening of two long-term fixed-coupon Treasury bonds. The sale aims to raise a total of KSh40 billion, which the government intends to direct toward budgetary support for the current fiscal cycle. This move is part of the state’s ongoing strategy to secure domestic funding for public projects and infrastructure development.

The offer consists of two tranches with varying maturities. The first is a 15-year bond, while the second is a 25-year paper. According to the prospectus issued by the Central Bank, these securities are being reopened to tap into the current market liquidity. By focusing on longer-dated papers, the government continues its effort to lengthen the maturity profile of the national debt and manage immediate refinancing risks.

Investors can participate in the auction with a minimum investment of KSh50,000 for non-competitive bids. This lower entry point is designed to encourage retail participation among Kenyans looking for stable, long-term returns. For institutional investors and those placing competitive bids, the minimum application is set at KSh2 million per CSD account per tenor.

Submitting bids for these securities has been streamlined through the DhowCSD investor portal and mobile application. The Central Bank has emphasized that all applications must be processed through this digital platform, which has become the standard for government securities trading. The portal also allows successful bidders to track their allocations and view payment details once the auction is finalized.

The 15-year bond, identified as FXD1/2020/015, carries a fixed-coupon rate of 12.7560%. The 25-year paper, FXD1/2018/025, offers a coupon rate of 13.4000%. Because these are reopened bonds, the Central Bank noted that they will attract accrued interest. This interest is added to the clean price of the bond to determine the final amount an investor pays, known as the dirty price.

Secondary trading for these instruments will be conducted at the Nairobi Securities Exchange in multiples of KSh50,000. This provides a liquidity window for investors who may wish to exit their positions before the bonds reach full maturity. Additionally, these government securities qualify as collateral for loans from regulated financial institutions, providing further flexibility for holders of the debt.

The Central Bank has scheduled the auction to close in early April, with the results expected to be announced shortly thereafter. Successful bidders will be required to settle their payments by the value date indicated in the prospectus. Failure to settle on time may result in investors being suspended from future government bond auctions.

As the government seeks to meet its internal revenue targets, these bonds represent a critical component of the domestic borrowing program. The locals and institutional players alike are expected to weigh the offered yields against current inflation trends as they submit their bids before the looming deadline.