Bonds Market News: March 2023

1. New Auction of Bonds – IFB1/2023/17

Earlier in the month, CBK issued a 17-year amortized Infrastructure Bond seeking to raise KES. 50 Billion from the market. The period of sale was between 15/02/2023 to 07/03/2023. The Auction date was on Wednesday, 8th March 2023.
As provided under the Income-tax Act, the Bond will be tax-free as is the case for all Infrastructure Bonds.


2. Tap Sale – IFB1/2023/17

CBK has opened a Tap Sale for the 17-year amortized Infrastructure bond IFB1/2023/17. It has now been opened up and all clients can participate in the tap sale with an aim to raise KES. 20 Billion.
The period of the sale in the primary market is between Tuesday, 14th March 2023 to Friday, 17th March 2023. The coupon rate is 14.399%.
The payment deadline for all successful bids is 2.00 pm on Monday, 20th March 2023. The Redemption date is 20th February 2040.

Results for the Treasury Bond Tap Sale
The Total Advertised amount was KES. 20 Billion and the total bids received at Face value was KES. 12.712 Billion, out of which KES 12.711 Billion was accepted, showcasing an acceptance rate of 99.99%.


3. The latest offering auction – FXD2/2018/10, FXD1/2022/03, AND FXD1/2019/15

CBK has gone to the market again offering the following bonds in order to raise funds for budgetary support:

(a) FXD2/2018/10
CBK issued a 10-year fixed coupon Treasury Bond seeking to raise KES. 20 Billion from the market. The coupon rate of the bond is 12.502%. The period of sale was between 16/03/2023 to 04/04/2023. The Auction date is on Wednesday, 5th April 2023.
The results of the auction of the bond are expected to be released on 06/04/2023.

(b) FXD1/2022/03 & FXD1/2019/15
CBK issued 3-year and 15-year fixed coupon Treasury Bonds respectively seeking to raise KES. 30 Billion from the market. The bonds have a coupon rate of 11.766% and 12.857% respectively. The period of sale was between 16/03/2023 to 18/04/2023. The Auction date was on Wednesday, 19th April 2023.
The results of the two bonds will be released on 20/04/2023. The bonds may be re-opened at a future date.


Particulars of the Bonds

Name Duration (Years) Coupon Rate
IFB1/2023/17 17 14.399%
FXD2/2018/10 10 12.502%
FXD1/2022/03 3 11.766%
FXD1/2019/15 15 12.857%



How to Invest in Government Bonds
1. Open a CDSC Account
This is an account allocated to a customer, either an individual or a corporate for the purposes of investing in government securities.
Opening a CDS account is free. You will need the following:
● A mandate card
● Copy of your National ID/ Passport
● Coloured Passport size photograph

2. Decide How you want to invest
Be in the know of the Treasury bonds on offer. Additionally, determine how much you want to invest in the Treasury Bonds.

3. Complete and Submit an Application Form
The forms will require your information such as:
● Name and contact information
● CDS and Commercial bank account numbers
● Issue number of the bond you want to invest in
NB: The forms should be submitted by 2 pm on the Auction days (Wednesdays or Thursdays)

4. Checking the Auction Results
Give a call to the Central Bank in order to find out whether your application was successful and the amount you will need to pay for the bond.

5. Payment
Always ensure the payment is done by 2 pm on the Monday after the Auction. Failure to make payments results in an investor being barred from future investment in Government securities.

6. Collect your returns
Upon maturity of the bond the payments will automatically be remitted to the commercial bank indicated on your CDS account.




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