The Central Bank of Kenya (CBK) successfully raised KSh 130.8 billion in loans from the domestic market following a Treasury bonds auction held on February 12, 2025. This amount significantly surpasses the initial target of KSh 70 billion, reflecting strong investor confidence in the country’s economic prospects.
The auction featured two reopened long-term infrastructure bonds: IFB1/2022/014, set to mature in October 2036, and IFB1/2023/017, maturing in February 2040. These bonds attracted bids totaling KSh 193.9 billion, indicating a robust demand from investors.
For the IFB1/2022/014 bond, with a remaining maturity of approximately 11.7 years, the CBK accepted KSh 65.2 billion out of the KSh 93.1 billion in bids received. The weighted average accepted rate for this bond was 13.9784%, while the market-weighted average rate stood at 14.0857%. Investors secured this bond at a price of KSh 103.50 per KSh 100 at the average yield.
The IFB1/2023/017 bond, with a maturity period of about 15 years, garnered bids totaling KSh 100.7 billion. The CBK accepted KSh 65.5 billion from these bids, resulting in a weighted average rate of accepted bids at 14.2806% and a market-weighted average of 14.4161%. The price per KSh 100 for this bond was set at KSh 106.98 at the average yield.
Investors had the option to submit either competitive or non-competitive bids. Competitive bids allow investors to specify their desired interest rates, while non-competitive bids accept the average rate determined by the auction. In this auction, competitive bids dominated, with the IFB1/2022/014 bond receiving KSh 54.8 billion in competitive bids and KSh 10.3 billion in non-competitive bids. The IFB1/2023/017 bond attracted KSh 46.7 billion in competitive bids and KSh 18.8 billion in non-competitive submissions.
The funds raised through this auction are earmarked for financing various infrastructure projects across the country, aiming to bolster economic growth and development. The CBK’s ability to surpass its fundraising target underscores the strong confidence investors have in Kenya’s economic stability and future prospects.
The CBK has announced that successful bidders will be notified and are required to make payments by February 14, 2025. The bonds will be officially issued on February 17, 2025. The minimum investment for these bonds was set at KSh 50,000, with competitive bids starting at KSh 2 million per Central Securities Depository (CSD) account. Non-competitive bids were capped at KSh 50 million per account. However, state corporations, public universities, and semi-autonomous government agencies were excluded from participating in non-competitive bids.
In a related development, the CBK has initiated a buyback program for select Treasury bonds, allowing investors to sell back specific bonds before their maturity dates. This move is part of the CBK’s strategy to manage liquidity and align with current market conditions.
The success of this auction, coupled with the CBK’s proactive measures in debt management, highlights the institution’s commitment to maintaining economic stability and fostering investor confidence in Kenya’s financial markets.
