The National Treasury has raised a mere Ksh.24.3 billion from bonds this month as the exchequer marks renewed investor apathy.
The re-opened 20 and 25-year bonds’ auction which closed on Tuesday attracted bids of Ksh.30.6 billion against a target of Ksh.40 billion to represent a 76.4 per cent performance rate.
Bids in the auction were concentrated on the shorter maturing 20-year paper which has a 5.6-year term to maturity, pointing to investors’ flight to duration risks.
The shorter maturing 20-year bond received bids of Ksh.17.3 billion with the long-dated 25-year paper (24.9 years to maturity) receiving bids of Ksh.13.2 billion.
Apart from the return of investor apathy after last month’s successful infrastructure bond issue, the National Treasury has continued to face greater yields as investors continue to demand a premium in the securities auction.
The market weighted average rate of return on the re-opened 20 year bond for instance rose above the 13.75 per cent coupon rate to reach 13.83 per cent while the return on the longer-dated 25-year re-opened bond hit 14.439 per cent against a 14.188 per cent coupon rate.
The rising yields signal the continued upward shift in the Treasury yield curve as investors push the rate of return higher.
The mopped Ksh.24.3 billion represents new borrowing for the current 2022/23 fiscal year.
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