Treasury’s outstanding stock of domestic debt fell by Sh20 billion in the last two weeks of July on lower subscriptions of Treasury bills amid high maturities, latest Central Bank of Kenya (CBK) data shows.
Domestic debt stood at Sh2.112 trillion at the end of July, down from Sh2.131 trillion two weeks earlier.
The market has been tight in recent weeks, meaning investors have been unable to take up all new debt offers on sale by the CBK. At the same time maturities have been high with investors unable to roll over the debt.
“Treasury bills subscription rates remained low throughout the month of July due to liquidity anomalies in the market, with subscription rates declining to an average of 63.8 per cent from 156.4 per cent in June,” said Cytonn Investments monthly markets summary for July.
“The CBK remained disciplined in stabilising interest rates in the auction market by rejecting aggressive bids that were priced above market, leading to a decline in the overall bids acceptance rate to 87.4 per cent during the month, compared to 92.7 per cent in June.”
The CBK data shows the share of domestic debt held in form of T-bills fell from Sh764 billion on July 14 to Sh744.5 billion at the end of the month, while that of Treasury bonds remained static at Sh1.332 trillion.
The Treasury did not use the overdraft facility at CBK throughout the month.
Last month, investors offered Sh19 billion on the 10-year Sh30 billion bond sale, but the CBK accepted only Sh5.2 billion.