Tea bonus pay raises money market liquidity

A multi-billion shilling tea bonus payout has boosted market liquidity helping the realisation of 79.30 percent performance in the uptake of the re-opened 15-year Treasury bond.
The interbank rate also fell to seven-year low at 2.0459 percent as Kenya Tea Development Authority this week released Sh62 billion bonus to local banks for payment to farmers.
Central Bank of Kenya (CBK) had opted for a bond re-opening over a tap sale to raise Sh32 billion with a coupon rate of 12.75 percent whose period of sale ended on October 30.
During the auction, CBK received bids worth Sh25.37 billion but accepted Sh21.26 billion. Competitive bids stood at Sh16.12 billion and non-competitive bids were Sh5.13 billion.
Analysts on Thursday said overall, they view CBK’s signalling effect with the bond re-opening was achieved with average participant bids anchored to the accepted rate from the initial bond offering so as not to miss out this time round.
“We also view the high liquidity environment — attributed to tea bonus payout, premium payments to insurance firms and contributions to fund managers — as boosting the uptake,” said Churchill Ogutu, a macroeconomic and fixed income analyst at investment bank Genghis Capital.
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