The Central Bank of Kenya (CBK) has reopened two older Treasury bonds. It aims to raise a combined KSh 50 billion to support the government's budget, Pulse Live Kenya reported. The CBK released the prospectus on Tuesday, People Daily reported.
The first bond, FXD1/2019/015, is a 15-year paper with a coupon rate of 12.857%. It has about 7.3 years left and matures on January 9, 2034. The second, SDB1/2011/030, is a 30-year bond paying 12.5%. It has roughly 14.3 years left and matures on January 21, 2041. Both carry a 10% withholding tax.
Bids close on Wednesday, November 18, at 10am. Successful bidders must collect their payment key and the amount due from the CBK DhowCSD portal or app on Friday, November 20. Trading on the Nairobi Securities Exchange starts on November 23, in multiples of KSh 50,000.
Small investors can place non-competitive bids from KSh 50,000, capped at KSh 50 million per account. Competitive bids need at least KSh 2 million per account for each bond. The auction uses a multi-price system. The CBK can allocate bonds in full or pro rata, and can reject any bid without giving a reason.
Investors need an active DhowCSD account. They can register by phone or computer. They need an email address, a Kenyan mobile number, a KRA PIN and bank account details. They also need a National ID, passport or alien card. Registration must be completed within seven days, or the CBK deletes the application. Joint accounts are allowed if each co-holder first registers their own account.
Investors who need cash before the bonds mature have two options. The CBK offers a rediscounting facility as a last resort. It charges three percentage points above the market yield or the coupon rate, whichever is higher. Holders can also use the bonds as collateral for loans from regulated lenders. Any pledge still active less than five days before maturity moves automatically to the lender's account, the CBK said.
Banks and non-bank financial institutions can count the bonds towards their statutory liquidity ratio requirements under the Banking Act, according to Pulse Live Kenya.