Central Bank of Kenya headquarters. The one-year T-Bill interest rate stands at 10.75 per cent. FILE
Non-bank investors have raised their stake in State debt holding as lenders’ share fell between June and September.
Investors classified as ‘others’ comprise saccos, listed and private companies, self-help groups, educational institutions, religious institutions and individuals increased their share by Sh16.4 billion to Sh104.4 billion.
The banking sector share decreased from 51.1 per cent to 49.3 per cent in the period.
“Insurance companies, pension schemes and other investors, increased from 10.5 per cent, 25.3 per cent and 8.7 per cent, respectively, in June 2013 to 10.8 per cent, 26.0 per cent and 9.9 per cent, on September 6, 2013,” said CBK in its latest weekly bulletin.
Only parastatals reduced their holdings of government securities, from 4.4 per cent to four per cent- to stand at Sh42.1 billion on September 6.
Credit to the private sector on the other hand has been going up, according to the CBK monetary policy committee which noted that the banking sector remains resilient and solvent. This year, bank lending is picking up with applications hitting 99,226 in July from 88,973 in May.
“Consequently, private sector credit grew by 13.5 per cent in July 2013 compared to 12.7 per cent in June 2013, distributed across all key sectors of the economy,” said the Monetary Policy Committee following its meeting on September 3.
Commercial banks’ average lending interest rates between May and July 2013 stood at 16.31 per cent, according to CBK, making the business attractive to lenders. Comparable rates for government securities fell to as low as five per cent at the end of June.
The government securities which had seen under subscription when the rates were lower in June are now attracting more investors though. Secondary market trading is also up.
“The bond market recorded heightened trading activity, with weekly turnover rising 37.6 per cent from the previous week to Sh10.8 billion,” said Kestrel Capital in a markets analysis released on Monday.
The 91 day T-bill rate stands at 9.23 per cent, down from its six-month high of 10.4 per cent seen in mid-August. The rate had gone down to 5.1 per cent at the end of June.
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