During the year, yields on government securities remained relatively stable due to Central Bank of Kenya (CBK) move of rejecting expensive bids.
Treasury bill and bond auctions recorded an oversubscription in 2017, with the levels coming in at 110.5 per cent and 100.2 per cent respectively.
However, this was lower than average rate for 2016, which stood at 149.6 per cent for the Treasury bills and 145.1 per cent for the Treasury bonds.
For the Treasury bonds, in the first half of 2017 that coincided with final half of fiscal year 2016/2017, the government was under pressure to meet its borrowing target. The average acceptance rate for the long-term papers came in at 74.2 per cent.
“This necessitated a marked need of selected bond re-openings, which registered marked appetite from the market. However close to a third of the amount was rejected,” said analysts at Genghis Capital.
“The second half saw benchmark bond issues, whose performance was relatively subdued; exception being the infrastructure bond whose timing at the tail end of the election was perfect.”
During the year, yields on government securities remained relatively stable due to Central Bank of Kenya (CBK) move of rejecting expensive bids.
In the bonds auctions, the CBK used tap sales to tame expensive bids and maintain interest rates at low levels.
With the enactment of the Banking (Amendment) Act, 2015, banks preferred to invest more in government securities as opposed to the riskier private loans.
“With less attractive lending rates a.. investors, largely banks, opted for less risky government debt,” said Stanslaus Kimani, NIC Securities fixed-income dealer.
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