NAIROBI (Xinhua) --
The Kenya government is getting cheaper
loans from the domestic market as interest rates on
Treasury bills and bonds fall following increased demand
Yield on the
indicative 91-day Treasury bill is expected to fall
below 8 percent in this week’s auction due to
oversubscription, according to analysts, as investors
seek to lock in good rates before they decline further.
interest rate on the benchmark security stood at 8
percent, down from 8.1 percent in the previous week and
8.3 percent in the Sept. 1 auction.
high bidding for the offer during the September 16
auction, with the 40 million U.S. dollars worth of
securities offered by the Central Bank attracting a
subscription of 225 percent.
yields on the 182 and 364 days bills stood at 10.8
percent and 10 percent respectively last week, down from
11.1 percent and 11.5 percent in the beginning of
securities attracted a subscription of 126 percent and
192 percent respectively, with the high bidding
attributed to banks, which are moving away from lending
high-risk borrowers following interest capping.
The fall in
the yields, has therefore, enabled the government to get
cheaper credit from the domestic market, accepting more
of investors’ bids.
from the 40 million U.S. dollars 91-day T-bill offered,
the government received bids amounting to 90 million
dollars and accepted 41 million dollars, according to
data from the apex bank.
government, on the other hand, accepted 114 million
dollars from the 115 million dollars bid for the 59
million dollars offer for the 364-day bill.
Treasury bonds, last month’s 250 million dollars offer
attracted 260 million dollars at 15 percent. This month,
Treasury is borrowing the same amount at 14 percent.
has recorded increased activity at the debt market after
the capping of lending rates because commercial banks
want to get the best yields from Treasury bills and
bonds. The government is the biggest winner,” said Henry
Wandera, an economics lecturer in Nairobi.
domestic debt currently stands at slightly above 18
billion dollars, with the bulk of the debt held in
Treasury bills and bond.