A cash-strapped National Treasury has issued a switch bond as it plans to push
payments to holders of government securities maturing at the start of January.
The respective securities holders have been offered to take up stakes in a new Ksh.87.8 billion infrastructure bond with
a six-year tenure and whose return/yield will be market determined.
The switch bond will be on offer to the securities holders until Wednesday next week.
The targeted investors in the switch bond include holders of T-bills- 2494/091 (91-days), 2454/182 (182-days) and 2380/364
(364-days) which have combined maturity sizes of Ksh.31.96 billion.
At the same time, the switch bond is targeted at holders of a two-year bond-FXD1/2021/002 with a maturity size of Ksh.55.85 billion.
“At primary issuance, only investors with minimum holdings of Ksh.100,000 (on all three securities) as at November 30, 2022” CBK said.
The move to offer the switch bond to the holders of the security is largely attributable to attempts by both the Central Bank of Kenya (CBK) and the
National Treasury to smoothen out potential liquidity challenges at the start of next year.
The switch bond technically pushes back the upcoming January 9 maturities by matching up investor liabilities to the new security’s offer.
The National Treasury previously deployed switch bonds to manage liquidity risks in 2019.