Local investors continue to exhibit confidence in government bonds with the latest oversubscription of a 3-year bond.
The Central Bank on behalf of the National Treasury had sought to raise Sh40 billion from the reopened bond but investors offered Sh43.07 billion, oversubscribing by 7.09 per cent.
The state, however, accepted only Sh34.3 billion, a departure from its ways of taking more than requested.
Last month, CBK revealed that an infrastructure bond seeking to raise Sh70 billion attracted bids worth Sh288.6 billion, with the state accepting Sh240.9 billion.
This trend of accepting more bids than requested on local bonds has persisted for almost a year now, pricking industry experts' curiosities.
A money markets expert Gaylord Mombo has welcomed the move by the state to take less, saying it is one of the ways to help reset the market that was headed to distortion.
"This will ease the high tempo currently in the market where the state was depriving credit flow to the private sector and households. Less debt appetite by the state, the higher flow of cheaper credit to the private sector. That is what brews an economy," Mombo told the Star.
"Thank God that some people who have been snoring at the apex bank and the exchequer have smelt some coffee. High yields on local debt have pushed up the overall cost of credit, crowding out the private sector. I hope that the regime cuts the debt appetite further," Munyua Muli of Dynamics Capital says.
While the state is still borrowing at above 18 per cent, offering 18.3 per cent on the reopened bond, the offer is below the way average bond of accepted bids of 18.4 per cent.
This means, investors lost almost a per cent in debt devaluation.
