NAIROBI, June 22 (Xinhua) -- Increased appetite for borrowing internally by the Kenya government has been met with high demand for securities, forcing Treasury to reject some bids.
Investors, in particular commercial banks, are bidding heavily for every Treasury bonds and bills floated by the Central Bank of Kenya (CBK), leading to oversubscription.
In this month's offer, the apex bank on behalf of Treasury put on sale Treasury bonds worth 291 million U.S. dollars for budgetary support.
Auction results released Thursday indicated that the regulator received bids worth 379 million dollars, a subscription of 130 percent.
The apex bank, however, ended up picking 254 million dollars of the bids floated by investors, which is 124 million dollars less.
The high subscription, however, has helped the government borrow cheaply from the public, with interest rates on various securities floated going down.
For the FXD 2/2007/15 bond, Treasury accepted bids at 12.5 percent which was 0.592 percent lower than the yields on the previous month's bond.
Analysts had expected the bond to be oversubscribed enormously due to the high appetite for domestic funds by the government as the elections draw closer.
Last week, subscription rates for the 91, 182 and 364 days Treasury bills stood at 311 percent, 159 percent and 89 percent, with the government accepting a total of 335 million dollars against 233 million sought.
The high uptake of funds from the Treasury bills and bonds showed that the government is striving to seek additional funds to fund its budget.
"The governments' appetite for funds to bridge the total budget deficit remains high," noted Cytonn, a Nairobi-based investment firm.
The East African nation's domestic debt currently stands at 20 billion dollars, a considerable rise since the start of February when it stood at 18.3 billion dollars.
Kenya has so far borrowed over 2 billion dollars locally this financial year against a target of 1.7 billion dollars, with overall public debt totaling 39 billion dollars.
