The Central Bank of Kenya (CBK) is seeking to tap into the local market to raise Ksh15 billion in two days to be channeled towards budgetary support.
In a notice, CBK Director, Financial Markets Robert Aloo invited local investors to take advantage of the recently floated Treasury Bond with the deadline listed as Thursday, May 9.
Treasury Bonds are long-term debt securities issued by the government that have a maturity date of at least ten years.
In this case, the government is dangling the bond to investors at a time when the market conditions are considered to be most favourable.
It is important to note that the Bond will have an average yield of 16.2273 per cent with an average adjusted price of Ksh100.9926.
This price takes into account the market value and how the cost will be affected.
The opening of the FXD1/2024/010 will seek to raise the funds at a coupon rate of 16 per cent. This is the annual interest rate paid to the bondholder and is expressed as a percentage of the bond's value.
Local investors who pledge first will be prioritised in the Bond sale. The investors are required to have channeled the payments by Monday, May 13.
"Bids shall be priced at the average rate of the accepted bids for the Treasury Bond auction value dated May 6, 2024, and adjusted for accrued interest," the notice read in part.
Those whose bids will be successful are directed to obtain details of amounts payable from the DHowCSD portal under the transactions tab on Friday, May 10.
Additionally, investors who default on the pledges face suspension from future investments in government securities.
Upon pledging, the Central Bank reserves the right to either accept bids in full or part or reject them in total without providing an explanation.
With Bonds, investors normally receive payments every six months throughout the period and at the end of the period, they receive the principal
To purchase a Treasury bond, one is required to invest a minimum of Ksh50,000.
