Kenya rejects high bids on gov't securities amid swelling debt

The Kenyan government has rejected high bids for its Treasury bonds and bills amid concerns over rising domestic debt.

The government, through the Central Bank, borrowed less than what it had called for in the case of a two-year bond, despite investors' swamping it with cash.

Last week, the apex bank put up for sale a two-year bond worth 297 million U.S. dollars for budgetary support.

Auction statistics showed Friday the paper attracted bids worth over 350 million dollars.

"The total number of bids received was 775 amounting 351 million dollars. The weighted average rate for successful bids was 12.5 percent," said the Central Bank.

However, despite the overwhelming subscription and seeking to raise 297 million dollars, the apex bank accepted bids worth 100 million dollars only.

Similarly, this week, the Central Bank floated 182 and 364 days Treasury bills worth 118 million dollars, 59 million dollars each.

However, for the 182-day bill, bids accepted amounted to 42 million dollars and 15 million dollars for the one-year paper, at 10.6 percent and 11.1 percent interest rate respectively.

Kenya's domestic debt rose to 19 billion dollars this week following a spike in borrowing, according to official data from the central bank.

Analysts noted that by rejecting bids, the government is working to stem excessive borrowing as it scales down spending, with the development budget having been cut by 2.1 billion dollars last week. Endit