Evans Omondi

[Evans Omondi @evansoomondi]

@gpdkaluma Your goons are in custody and you are here yapping

[Evans Omondi @evansoomondi]

@ahmednasirlaw You supported him when he was in power;you worked for him and he paid you! Why couldnt keep a distance then. You have habit of sanitizing whoever is in power.

[Evans Omondi @evansoomondi]

📊 CBK TREASURY BONDS: WHAT THE LATEST AUCTION TELLS KENYANS ABOUT GOVERNMENT BORROWING

The latest reopening of Kenya’s 15-year and 20-year Treasury Bonds provides an important lesson about government borrowing, investor confidence and the cost of financing Kenya’s public debt.

According to the Central Bank of Kenya (CBK), the two reopened bonds attracted KSh80.56 billion in bids, against KSh50 billion initially offered.

CBK ultimately accepted KSh57.51 billion.

🔹 15-YEAR TREASURY BOND

• Bids received: KSh34.56 billion
• Amount accepted: KSh28.60 billion
• Average accepted yield: 12.7338%
• Coupon rate: 12.34%
• Bid-to-cover ratio: 1.21 times

🔹 20-YEAR TREASURY BOND

• Bids received: KSh46.00 billion
• Amount accepted: KSh28.90 billion
• Average accepted yield: 13.6016%
• Coupon rate: 12.873%
• Bid-to-cover ratio: 1.59 times

💡 WHAT DOES THIS MEAN?

1️⃣ Investors still have a strong appetite for Kenyan government securities.

The 20-year bond received bids equivalent to about 1.59 times the amount implied for that tranche. This means investors were willing to commit substantially more money than the amount ultimately accepted.

2️⃣ Kenya is borrowing at a significant cost.

An accepted average yield of 13.60% on a 20-year bond is an important figure. Government borrowing is not free money. The interest must ultimately be serviced from public revenues.

3️⃣ Longer-term borrowing costs more.

The 20-year bond attracted a higher yield than the 15-year bond:

13.6016% vs 12.7338%.

This illustrates a fundamental principle of finance: investors generally demand additional compensation for committing their money for a longer period.

4️⃣ Coupon rate and yield are NOT the same thing.

This is where many Kenyans get confused.

The coupon rate is the bond's stated interest rate, while the yield reflects the return investors require based on the price at which they acquire the bond.

Therefore, don't simply look at the coupon and assume that is the actual market return.

🇰🇪 THE BIGGER QUESTION

Strong demand for Treasury bonds can be good news because it means government securities remain attractive to investors.

But there is another side of the story:

Who ultimately pays the interest?

The answer is the Kenyan taxpayer.

Every shilling borrowed today creates a future obligation for the Government to repay the principal and service the interest.

Therefore, Kenyans should not look at Treasury-bond auctions merely as financial-market statistics. They are also a reflection of the country's fiscal position, borrowing requirements and future debt-service obligations.

📌 FOR ORDINARY KENYANS

Treasury bonds are not only instruments for banks and large institutions. Individual investors can also participate in Kenya's government securities market, subject to the applicable CBK requirements.

The important lesson is this:

Government borrowing is somebody else's investment.

When the Government borrows, an investor earns interest. When the Government pays that interest, the money ultimately comes from public resources.

That is why every Kenyan should understand Treasury bills, Treasury bonds, yields, coupons, government debt and debt servicing.

Financial literacy is not just for bankers and accountants.

It is for every taxpayer.

Source: Central Bank of Kenya — Results for the reopening of FXD3/2019/015 and FXD1/2019/020.

EVARIE MANAGEMENT CONSULTANTS
Professional Accounting | Tax | Audit | Business & Financial Advisory

#EvarieManagementConsultants #TreasuryBonds #CBK #KenyaDebt #PublicFinance #FinancialLiteracy #GovernmentBorrowing #TreasuryBondsKenya #Taxpayers #Investment

[Evans Omondi @evansoomondi]

@MissLingard14 Kunyima mtu is even more childish

[Evans Omondi @evansoomondi]

@MissLingard14 I thought you would tackle more serious issues than just about the foreskin.

[Evans Omondi @evansoomondi]

@HonAdenDuale I don't understand you and the definition of profiling. The media is reporting the state of things as they are. This is a matter that was live in court and the court has pronounced itself in a ruling that is in public knowledge. It was held that basic standards were never met.

[Evans Omondi @evansoomondi]

@iammissme1 Why not?

[Evans Omondi @evansoomondi]

@parvin_256 These exergerrations spoil the broth.

[Evans Omondi @evansoomondi]

@parvin_256 Serious about what???

[Evans Omondi @evansoomondi]

@parvin_256 Even without money....get money out of this plz.

[Evans Omondi @evansoomondi]

@EstherPassaris I thought you were referring to another president

[Evans Omondi @evansoomondi]

@zero_mind8 He is a very useless man..

[Evans Omondi @evansoomondi]

@gabrieloguda I didn't know that Raila is a good actor.

[Evans Omondi @evansoomondi]

@AlinurMohamed_ Nangsens

[Evans Omondi @evansoomondi]

@gabrieloguda Whose wall ?

[Evans Omondi @evansoomondi]

@AlinurMohamed_ Let the jersey come now

[Evans Omondi @evansoomondi]

@MuchiriGichuri Do you mean to say that now it's not about cocaine? Her case is mutating as time goes

[Evans Omondi @evansoomondi]

@BiancaNaom1 You sound like you have been already bullied.. sorry for your predicament

[Evans Omondi @evansoomondi]

@BiancaNaom1 Earth has swallowed the only hopeful one of your earth.

[Evans Omondi @evansoomondi]

@ahmednasirlaw @makaumutua I know who you are trying to please..you know... you aren't honest.