Kenya borrows more from public as appetite for T-bills grows

Kenya has stepped up borrowing from the domestic market as investors' appetite for government securities remains high.

The East African nation's Central Bank of Kenya (CBK) floated bonds worth 248 million U.S. dollars as it sought to raise cash for budgetary support.

The floating of the 10-year and 15-year Treasury bonds comes in the backdrop of high liquidity in the market, which has seen Treasury bills offers massively oversubscribed in the last weeks.

"The CBK acting in its capacity as a fiscal agent for the Republic of Kenya is offering the investing public an opportunity to invest in 10 and 15 year bonds," said the apex bank in a notice on its website.

Yields on the two bonds, which mature in 2013 and 2028, average 12 percent, a little higher than those offered on shorter-term Treasury bills whose interest rates are on the decline.

Investors in search of higher returns are, therefore, likely to scramble for the two bonds.

Performance of past bond offers has been mixed, with some attracting massive interest despite lower yields while for others, investors keeping off in spite of high interest rates.

But the current timing for such a massive offer seems to be perfect for the CBK.

Meanwhile, all its offers for the 91-day, 182-day and 364-day Treasury bills have been oversubscribed this week, as in the last three, as investors appetite grows to a new high despite falling yields.

The bank offered for sale 182-day and 364-day bills worth 118 million dollars, 59 million dollars each.

"The total number of bids received was 120 million dollars representing a subscription of 202 percent and 209 million dollars representing a subscription of 353 percent for the 182 and 364 days bills respectively," said John Birech, the acting director of financial markets at the Central Bank.

CBK borrowed more, accepting bids totalling 75 million dollars for the 182-day bills and 124 million dollars for the 364-day bills.

Yields on the bills fell this week to 10.9 percent from 11.3 percent for the 182-day and 12.2 percent from 12.8 percent for the 364-day.

Last week, the total number of bids received from investors was 85 million dollars and 141 million dollars for the 182 and 364 days bills respectively.

For the 91-day paper, the regulator offered bills worth 40 million dollars as in past weeks. The bank received bids worth 123 million dollars at a yield of 8.8 percent and accepted 91 percent. Enditem