As we had informed you earlier (see CBK’s 5-Year Bond: Your 5-year Investment) the Central Bank of Kenya (CBK)  will today close the offer for sale of a 5 year bond worth KES 3 billion. Bids have been received since the 9^th of May and the auction closes today.

The minimum amount one can invest in the bond is KES 50,000 and payments up to and below KES 1 million must be made by cash, banker’s cheque or RTGS and must reach the CBK by 2pm (for cash and cheques) and by 3:30pm (for the RTGS) on the 28^th of May 2012. Amounts exceeding KES 1 million must be made by RTGS.

The first coupon payment, which will be set by the market at today’s auction, will be paid on the 26^th of November 2012, whose coupon. Payments will be paid every six months after that date. The last payment will include your initial investment and the final coupon and will be made on the 22^nd of May 2017.

The yield on Kenya's five-year bond is expected to fall at the auction in line with the trend yields have been following over the last two weeks. Yields on government securities have tumbled in recent oversubscribed sales, pulled down by a Central Bank, keen on lowering the cost of borrowing, rejecting many bids. Bids are however expected to be in excess of what the CBK desires, as has been the case, as investors try to lock in the higher than usual yields before they fall further to single digit levels.