NAIROBI (Xinhua) --
Kenya is selling two ten-year bonds worth 291
million U.S. dollars as it seeks to fill a budget deficit before
the close of the fiscal year in June.
The two bonds, FXD
3/2008/10 and FXD 1/2009/10, are up for sale from April 10 to 18
at the Central Bank of Kenya (CBK) and will later be listed at
the Nairobi Securities Exchange’s secondary market from April
“The Central Bank,
acting as a fiscal agent for the Republic of Kenya, is offering
the investing public an opportunity to invest in two ten-year
fixed coupon Treasury bonds for budgetary support,” said the
apex bank in a prospectus Tuesday.
Interest rate on the
long-term papers, the fourth to be floated this year, has been
set at 10.7 percent, which is lower than the 11.9 percent for
last month’s offer.
Treasury last week
presented the east African nation’s 2017/2018 budget worth 26
billion dollars in parliament, with the country only raising
slightly half the amount from taxes, leaving a huge deficit. The
2016/2017 budget was worth 23 billion dollars.
Analysts noted that
the government has turned to the domestic market to raise funds
due to the lengthy process during external borrowing.
“Given that the
government only has three months to the close of the current
fiscal year and the fact that borrowing from the foreign market
is a much longer process than borrowing from the domestic
market, the government is likely to use the latter to plug in
the deficit that is likely to arise,” said Cytonn, a
Nairobi-based investment firm.
warned that the borrowing creates uncertainty in the money
market as it exerts upward pressure on interest rates, and
results in longer term papers not offering investors the best
returns on a risk-adjusted basis.
“It is due to this
that we think it is prudent for investors to be biased towards
short-term fixed income instruments,” said the firm.