T-bills auction fails to hit target by 70 per cent

The Central Bank has received KES7.16 billion from Treasury Bills for the week ending March from KES24 billion worth of paper put on sale.

The 91-day, 182-day and 364-day T-bill were undersubscribed recording 50.45 per cent, 7.65 per cent and 44.05 per cent respectively.

The CBK accepted KES2.02 billion, 760 million, and 4.37 billion respectively of the bids for the 91-day, 182-day, and 364-day T-bills on offer.

In a bid to raise KES60 billion, the Central Bank of Kenya opened an infrastructure bond with the period of sale running between March 26 and April 6.

Read also: Kenya gets Sh255bn IMF loan to fight Covid-19 pandemic

By mid-March, the government had borrowed Sh407.8 billion from the domestic market, including commercial banks, pension funds, insurance firms and parastatals.

But with the new infrastructure bond, the stock of domestic bond will surge to Sh467.8 billion should the CBK attract sufficient subscribers.

The bond will be traded in the secondary market starting April 13 at the Nairobi Securities Exchange in multiples of Sh50,000.

The Treasury is keen to have the debt ceiling raised from the current Sh9 trillion as it seeks to borrow more to finance Kenya’s post-Covid-19 economic recovery strategy.

Whereas the Treasury has insisted that it will stay away from expensive commercial loans, it recently signaled that Kenya might have to return to the Eurobond market to borrow at least Sh124 billion by end of June next year.

Last week, the International Monetary Fund (IMF) extended Sh255 billion loan to Kenya to support the country’s Covid-19 response programs as well as cushion the nation’s debt vulnerabilities.

To address the debt distress, IMF said, Kenya has taken action to hold the fiscal deficit and debt ratios to 8.7 per cent and 70.4 per cent of the Gross Domestic Product, respectively, this fiscal year.

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