Investors sink Ksh.105 billion in August bonds

Local investors have continued to pump funds to the government borrowing pipeline sinking bids worth Ksh.104.6 billion to August’s Treasury bonds.

The investors who largely comprise of banks and fund managers and who further cover about 99 per cent of takers of government debt have continued to show elevated appetites for government securities.

This is as they maintain a conservative investment stance amidst continued volatility from the COVID-19 pandemic.

The Ksh.104.6 billion bids surpassed the target of Ksh.60 billion by the Central Bank of Kenya (CBK) for the issue with the reserve bank accepting a partly Ksh.80.3 billion of the bids.

Investor bids were concentrated on the higher yielding new 25-year paper at Ksh.43.5 billion as the bidders sought a greater return.

CBK continued its stance against aggressive bidding in view of keeping interest rates in check.
The weighted average rate of accepted bids for the two re-opened 10 and 20 year paper and the new 25-year paper stood at 12.172, 13,187 and 13.444 per cent respectively.

The maintained appetites for government securities however comes at the expense of private sector lending with banks shunning the riskier credit contracts for safe haven tools.

Private sector credit growth has remained in single digit levels topping off at 7.7 per cent in June 2021 according to data from the CBK.

Further data from the bank shows private sector credit growth is only projected to hit double figures in December this year.

Lending to the private sector which is also regarded as the ‘real economy’ is yet to recover in years following the implementation of interest rate caps in September of 2016 with the recent global health crisis slamming optimism on its recovery.