As at September 56% of Kenya's doemstic debt (t bills, bonds etc) was held by banks. If we go by this ratio, 24B of this bond's bids were by banks. That IS crowding our, my friend, no matter what you say about ins cos and double bidding.

@kularaha - CBK has been trying to avoid borrowing from banks for the Infrastructure Bonds. I do not know if it is working.

At a post-tax return of 12.57%... why even lend to customers who may default? And need monitoring. And need branches. And need services. And may be late in paying.

I believe the maximum allocation to a single institution is KES 10mn (if there are sufficient bidders at attractive prices). Perhaps the limit is higher for larger bonds.

Insurance firms find the these Bonds (since they have partial redemptions) particularly attractive.

High interest rates. Tax exempt. Partial redemptions though the life of the Bond. Low risk.

kularaha has a point...luk at the balance sheets of bbk and scnk...both banks have markedly upped their stakes in gvt securities...aidan mohamed is on record as sayin that bbk wud reduce lending and invest in treasuries...private sector definately gettin crowded out...wats worse is that thereis little proof that these funds ever get used for infrastructure....

One point that we seem to be losing in the over subscription levels of the most recent bond issues is that it shows that there is serious money sitting on the sidelines looking for a home. While this is an indicator towards the level of risk aversion w.r.t equities, it could also be a pointer that this money could find its way into the equities market. Now, what's gonna trigger that?

@ Kularaha. you're right. Though there are some quarters claiming that lending to private sector hasn't really been affected. i doubt.

The bond has a coupon of 12% down from 12.5% on the first bond with similar features. with KNBS coming up with the 'correct' method of calculating inflation figures the CBK should revise these coupons downwards....will this trigger a redirection of funds to the equities market?

@scooby, this bond had no limit for application and in any case the limit is tagged on non competitive bids only for the kawaida bonds.