Capital Markets

T-bonds maturity profile hits 7.8 years on refinancing risk cut push

gov

Governor Patrick Njoroge. FILE PHOTO | NMG

alushula

Summary

  • The time-to-maturity of bonds had fallen below six years in the period between October 2017 and March 2018.
  • Dr Njoroge said the mix of T-bills and T-bonds stood at 29 per cent to 71 per cent at the end of July respectively, with bond maturities extending up to 2044.
  • CBK data showed T-bonds amounted to Sh2.22 trillion of the total domestic debt of Sh3.185 trillion mid-July.

The Central Bank of Kenya (CBK) has lengthened the maturity profile of Treasury bonds to 7.8 years from 6.1 years two years ago, on sustained issuance of longer-term securities to lower refinancing risk.

Governor Patrick Njoroge said in last week’s post-Monetary Policy Committee meeting that the longer maturity profile is an outcome of the strategy that started about two years ago.

“This is a policy we started about 18 months ago and since then the maturity of bonds has lengthened from 6.1 years in July 2018 to 7.8 years,” said Dr Njoroge.

“We have tried to provide stability in the yield curve through a mix of alternate tenors (of bonds) that appeal to different investor appetite.”

The time-to-maturity of bonds had fallen below six years in the period between October 2017 and March 2018.

Dr Njoroge said the mix of T-bills and T-bonds stood at 29 per cent to 71 per cent at the end of July respectively, with bond maturities extending up to 2044.

CBK data showed T-bonds amounted to Sh2.22 trillion of the total domestic debt of Sh3.185 trillion mid-July.

Overall, the maturity profile of domestic debt has lengthened to 5.7 years from 4.1 years two years ago.

The governor said that CBK remains on course to lengthen the maturity of domestic debt further despite the disruptions of Covid-19 pandemic.

“We are considerate also of the investor appetite especially during this period of Covid-19 so that we present a menu of options cognisant of this unsettling time,” he said.