NAIROBI (Xinhua) --
Demand for Kenya’s Treasury bills and bonds has
surged in the weekly auctions as commercial banks shift to the
securities following the signing of a law capping interest
The banks are seeking to cash in on the current
yields before they fall to make up for low returns expected
after interest rate charges were limited to no more than four
percentage points above the Central Bank rate.
Besides, Treasury bills and bonds are safer options for the
financial institutions as the government’s repayment of the debt
is assured unlike lending to individuals or business
In this week’s auction, the Central Bank of Kenya (CBK) said
Friday it offered 91-day Treasury bills worth 39 million U.S.
The total number of bids received was 191 amounting to 109
million dollars, representing a subscription rate of over 274
percent. The total bids accepted amounted to 45 million dollars.
However, the surge in demand saw the 91-day bill yields go
down with the weighted average of accepted bids standing at 8.1
percent, down from 8.3 percent in the previous auction.
Similarly, the CBK put on sale 182 and 364-day bills worth 59
million dollars each and received overwhelming demand.
According to CBK, banks have raised their hold on domestic
debt, which stands at over 18 billion dollars, from 54.1 percent
to about 55 percent in the last two weeks, a period the Banking
Act (Amendment) Bill 2015 has been in existence.
"Banks are working hard to ensure the new law does not hurt
their profits. Treasury bills and bonds present them this
opportunity. Expect subscription on the securities to increase
in coming weeks even as yields drop," said Henry Wandera, an
economics lecturer in Nairobi.
The government is expected to borrow more this financial year
for budgetary support with domestic borrowing expected to hit
2.3 billion dollars.