The Central Bank of Kenya (CBK) has announced the opening of bids for two government bonds valued at Ksh30 billion. These bonds, identified as FXDI 2018/15 and FXDI 2022/25, are part of the government’s ongoing efforts to secure funding for budgetary support.
In a statement released on Monday, December 16, CBK confirmed that the bonds’ issuance aligns with its prospectus for the re-opened 15-year and 25-year fixed coupon treasury bonds, dated January 20, 2025.
Bond Details
The FXDI 2018/15 bond offers an interest rate of 12.65% and a tenor of 8.3 years, with payments scheduled from May 2025 to May 2033. On the other hand, the FXDI 2022/25 bond features a higher coupon rate of 14.88% and a longer tenor of 22.8 years, with maturity set for 2047.
CBK has opened the sale period for the bonds, which runs from December 13, 2024, to January 15, 2025. The maximum non-competitive bid amount is Ksh50,000, while competitive bids start at Ksh2 million per Central Securities Depository (CSD) account.
However, CBK clarified that the non-competitive bid limit does not apply to state corporations, public universities, or semi-autonomous government agencies.
The auction is scheduled to close on January 15, 2025, at 10:00 AM, with results expected later the same day.
How to Bid
Investors can submit their bids electronically via the CBK DhowCSD platform or the Treasury Mobile Direct (TMD) service. CBK will notify successful bidders through the DhowCSD Investor Portal, and payment confirmations will follow by January 17, 2025.
The bonds are available exclusively to investors with active CSD accounts and will be listed on the Nairobi Securities Exchange (NSE). Secondary trading for these bonds will commence on January 20, 2025, in multiples of Ksh50,000.
Bonds Interest Rates Explained
CBK has provided detailed insights into the accrued interest (AI) rates for the bonds. The FXDI 2018/15 bond carries an AI of Ksh2.1894 per Ksh100. For instance, if the quoted yield is 13.00%, the dirty price combines the clean price (Ksh98.2061) and AI (Ksh2.1894), resulting in Ksh100.3955.
Meanwhile, the FXDI 2022/25 bond attracts a higher AI of Ksh3.5470 per Ksh100. With a quoted yield of 14.00%, the dirty price totals Ksh104.7681, derived by adding the clean price (Ksh101.2211) and AI (Ksh3.5470).
CBK clarified that withholding tax is calculated based on the clean prices for both bonds. Additionally, it reserves the right to accept bids in full, partially, or reject them without explanation.
Prospectus for Re-Opened Fifteen and Twenty Five Years Fixed Coupon Treasury Bonds
FXD1/2018/15 and FXD1/2022/25 dated 20/01/2025 pic.twitter.com/qBYSZ6DesY— Central Bank of Kenya (@CBKKenya) December 16, 2024
