To avert a cash shortage early in the new year, the Treasury is trying to convert Sh87. 8 billion worth of government securities that are set to maturity in January into a medium-term infrastructure bond.
The Treasury has only ever executed a switch bond, or the direct conversion of maturing Treasury bills and bonds into longer-term securities, once, in June 2020.
The government’s fiscal agent, the Central Bank of Kenya (CBK), stated that it is principally seeking to renew a maturing two-year bond issued in January 2021, from which investors are set to receive Sh55. 85 billion.
The switch bond, which took the shape of a six-year infrastructure paper in June 2020, netted Sh20. 2 billion instead of the Sh25. 6 billion it was intended to, representing the value of an expiring one-year Treasury bill that the state was hoping to roll over.
Those who choose the switch option in the current offering will also benefit from receiving a higher interest rate relative to their maturing holdings.