HIGH UPTAKE

National Treasury borrow Sh31 billion, against high investors' bids

In Summary

•National Treasury received bids worth Sh59.82 billion against advertised Sh24 billion.

•It only bought Sh23.42 billion worth of the one-year bids against Sh52.15 billion bids offered at backdrop of improved liquidity from demonetization and payment of matured debt.

Treasury. Photo/Monicah Mwangi
Treasury. Photo/Monicah Mwangi

Investors showed interest in the short-term investments offered by National Treasury in the week ending June 27, new data states.

Central Bank's data on performance for the 92, 182 and 364-days treasury bills were oversubscribed with National Treasury receiving bids worth Sh59.82 billion against advertised Sh24 billion.

The uptake represented performance rate of 249.24 per cent, on declining interest rates on the bills. The average interest rates for 91-day, 182-day and 364-day accepted bids was 6.73 per cent, 7.48 per cent and 8.75 per cent respectively, a marginal decline from the previous caution.

Treasury however accepted Sh31.08 billion worth from the bidders mostly commercial banks who have turned to the securities to increase their returns.

In the last sale for week ending June 201, Treasury received bids totaling Sh56.8 billion, representing a performance of 236.7 percent. It however accepted bids worth Sh9.905 billion.

With the government turning to securities to finance its fiscal deficit, the data showed a shun on the one-year bills as the government tries to avoid expensive debt.

It bought only Sh23.42 billion against Sh52.15 billion bids offered at backdrop of improved liquidity from demonetization and payment of matured debt.

The target for domestic borrowing for the current fiscal year stands at Sh310 billion, while external creditors are expected to plug in Sh321.5 billion in order to fill the Sh635 billion fiscal deficit.

The government's borrowing through Treasury bonds and bills has been high, taking advantage of high demand from investors.

As at April, Kenya’s debt, stood at Sh5.04 trillion, or 56 per cent of GDP, pushed by the securities which had registered a growth of 8 per cent year-on-year in 2018 as opposed to typical loans that grew by 2.2 per cent.

By the end of February, the government had borrowed 66 percent of the domestic target from the market.