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Banks to get priority in bonds buying shake-up
Experts reckon that for the plan to work, the lenders will need to have preferential access to new bonds so as to build up their holdings effectively for liquidity purposes, while influencing and streamlining price discovery.
Selected commercial banks will get priority in buying Treasury bonds under a proposed shift outside the auction system, which is expected to revitalise government paper trading and lower returns.
The Central Bank of Kenya (CBK) has issued draft regulations for the creation of a separate market for bond trading or over the counter (OTC) where the banks or market makers will set the price and buy nearly the whole government paper.
