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Capital Markets

T-bills drop Sh40bn on debt maturities

National Treasury building
The National Treasury building in Nairobi. FILE PHOTO | NMG 

The outstanding stock of Treasury bills dropped by Sh40 billion in May on the back of heavy maturities in domestic debt.

Latest Central Bank of Kenya (CBK) data shows that there was Sh963.7 billion worth of outstanding Treasury bills by May 24, representing 34.7 percent of total domestic debt, down from the record high of Sh1.003 trillion on May 3 that represented 36.7 percent of total domestic debt.

Total domestic debt maturities in May stood at Sh170 billion, the bulk coming from Treasury bills. June maturities are expected to hit Sh132.8 billion.

At the same time, the stock of outstanding Treasury bonds has gone up by Sh53.3 billion to Sh1.746 trillion.

During May’s Sh50 billion Treasury bond auction, investors bid Sh70.8 billion, out of which CBK took up Sh58.5 billion. Bond maturities of Sh5 billion meant that new borrowing amounted to Sh53.5 billion.

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The domestic borrowing pressure on the government has somewhat abated since it took up the Sh210 billion Eurobond last month, and followed that with a Sh75 billion facility from the World bank for budgetary spending.

The Treasury has in this month’s bond issue reduced the target amount to Sh40 billion, from the Sh50 billion it had been issuing in recent months.

The CBK data shows that Treasury also tapped into other financing options in May, hence the reduced dependence on T-bill financing.

The Treasury took up an additional Sh22 billion on the overdraft facility it maintains at CBK, taking the outstanding amount to Sh35.9 billion.

It also increased the credit classified as “other debt” from Sh26.3 billion to Sh31.4 billion. This debt includes advances from commercial banks.

Total domestic debt thus increased by Sh40.7 billion during the month, as the rise in Treasury bonds and other lines of credit outweighed the fall in outstanding stock of Treasury bills.

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