The Central Bank of Kenya (CBK) has announced the opening of bids for two government bonds totaling Ksh30 billion.
In a statement on Monday, December 16, CBK said the FXDI 2018/15 and FXDI 2022/25 bonds are part of the government’s ongoing effort to raise funds for budgetary support.
The issuance is in line with CBK’s recent prospectus for re-opened fifteen and twenty-five-year fixed coupon treasury bonds, dated January 20, 2025.
According to CBK, The FXDI 2018/15 bond offers an interest rate of 12.65% and a tenor of 8.3 years, with payments scheduled for May 2025 through to May 2033.
Meanwhile, the FXDI 2022/25 bond, with a slightly higher coupon rate of 14.88%, has a longer tenor of 22.8 years, maturing in 2047.
The sale period for the bonds runs from December 13, 2024, to January 15, 2025.
The maximum non-competitive bid amount for both bonds is set at Ksh50,000, with competitive bids starting at Kshs2 million per Central Securities Depository (CSD) account.
However, CBK clarified that the non-competitive bid amount does not apply to state corporations, public universities and semi-autonomous agencies.
The auction will close on January 15, 2025, at 10:00 AM, with results expected by the same day.
Also Read: CBK Announces New Monetary Policy Committee Members
CBK Explains Bonds Interest Rates
The FXDI 2018/15 bond attracts Accrued Interest (AI) 0f Ksh.2.1894 per Ksh100.
Example: If quoted yield is 13.00%, dirty price is the clean price (Ksh 98.2061) plus Al (Ksh 2.1894) which equals Ksh. 100.3955.
However, the FXDI 2022/25 bond attracts Al of Ksh3.5470 per Ksh100.
For instance, if the quoted yield is 14.00%, dirty price is the clean price (Ksh 101.2211) plus Al (Ksh 3.5470) which equals Ksh. 104.7681.
The withholding tax is computed on clean prices for both bonds.
Also Read: CBK Reduces Interest Rate on Loans
How to Bid
Investors interested in participating in the auction are required to submit their bids electronically through the CBK DhowCSD or Treasury Mobile Direct (TMD) platforms.
Successful bids will be notified via the CBK DhowCSD Investor Portal, and investors can expect payment details to be confirmed by January 17, 2025.
These bonds are intended for investors with active CSD accounts and will be listed on the Nairobi Securities Exchange.
Further, they are also eligible for secondary trading, with transactions starting on January 20, 2025, in multiples of Ksh50,000.
“The CBK reserves the right to accept the bids in full or part thereof or reject them it total without giving any reason,” reads part of the statement.
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