The latest newer bond stood out, receiving bids worth Sh31.3 billion, far exceeding the Sh20 billion on offer The difference in demand highlights a growing preference among institutional investors for fresh issuances. /HANDOUT Institutional investors are shifting their attention to newly issued government securities, even as long-term state papers continue to offer solid returns.
Latest auction results from the Central Bank of Kenya shows that while reopened long-term bonds still attract interest, newer papers with slightly higher yields and fresh liquidity are drawing stronger demand from pension funds, insurance firms and other large investors.
In what is coming as a change to Kenya’s debt market dynamics, older bonds are not attracting as much interest from investors. In the most recent auction, the government offered two 30-year bonds, a reopened issue with about 14.9 years remaining to maturity and a new 30-year infrastructure-style bond.
The newer bond stood out, receiving bids worth Sh31.3 billion, far exceeding the Sh20 billion on offer. “This translated to a performance rate of 156.4 percent, indicating strong investor appetite,” said CBK director of financial markets Robert Aloo. By contrast, the reopened bond attracted bids worth Sh7.05 billion against a similar offer, reflecting a more modest uptake with a performance rate of 35.3 per cent.
The difference in demand highlights a growing preference among institutional investors for fresh issuances. The improvement in uptake of newer bonds might be largely driven by slightly better returns and improved liquidity conditions associated with new bonds. “The newer 30-year bond offered a market-weighted average yield of about 13.87 percent, compared to 13.11 percent for the reopened bond,” CBK said in it latest release.