In a dutch auction the seller is offering two or more of an identical item for auction. Unlike a standard auction, a dutch auction may have more than one winning bidder.

Each bidder bids on either all, or a desired number of the auction items, and indicates the price that he/she is willing to pay for each of item. At the end of the auction, all winning bidders will pay the same price for each of their items, which is the lowest qualifying (successful) bid. If there are more successful bids than items available, priority goes to the bidders who submitted their bids first.

In order to beat another bidder, a bid must simply have a higher total bid price per item than the other bids, regardless on the number of items that are being bid on.

For example, suppose the sponsor of the issuance is seeking to raise $10 billion in ten-year notes with a 5.125% coupon and in aggregate the bids are as follows:

$1.00 billion at 5.115%
$2.50 billion at 5.120%
$3.50 billion at 5.125%
$4.50 billion at 5.130%
$3.75 billion at 5.135%
$2.75 billion at 5.140%
$1.50 billion at 5.145%

In this example the % at high is 66.66%, meaning only $3 billion of the $4.5 billion at 5.130% will get bonds. Bids will be filled from the lowest yield (highest price) until the entire $10 billion has been raised. This auction will clear at a yield of 5.130%, and all bidders will pay the same amount. In theory, this feature of the Dutch auction format leads to more aggressive bidding as those who in this case bid 5.115% will receive the bonds at the higher yield (lower price) of 5.130%.

Source: Wiki

This auction method was pioneered by D&B during the Sasini bond issue and is used by govts worldwide. Is this the preferred method being used to issue bonds? The CBK governor is trully a maverick, looking to lower interest rates, but is this going to work? Read more:

http://www.businessdaily.../-/tpw41uz/-/index.html

Scubidu, The yield of 8.6% is almost similar to the current Greek ten-year bond yield at 8.5%. I thought Kenya has better prospects than Greece in terms of debt to GDP and the budget deficit so our bond yield should be lower may be around 6%