According to Business Daily Africa, heavy domestic debt maturities have cut the stock of outstanding Treasury bills further, which now account for 34.2 percent of the total domestic debt compared to 36.7 percent at the beginning of May 2019.
Data from the Central Bank of Kenya, shows that the Treasury bills stock stood at 954.25 billion Kenyan Shillings at the end of June 2019, down by 49.3 billion Kenyan Shillings from the all-time high stock of 1.003 trillion Kenyan Shillings at the beginning of May 2019.
While investors have reportedly been bidding heavily in the weekly auctions which have gone on recent weeks, especially for the one year Treasury bill, the Central Bank Of Kenya, has so far been content to reject expensive offers and settle for little more than the amounts required to roll over the maturing debt.
This strategy has in turn pushed the yields on offer in the debt issues lower.
The situation is mostly likely going to continue in July 2019, with heavy Treasury bill maturities coming at a time when the Treasury is yet to fully roll out the fiscal year’s spending.
Debt analysis by Commercial Bank of Africa, also shows that the July 2019 domestic debt maturities are expected to hit 133 billion Kenyan Shillings.
The Central Bank Of Africa said in a treasury note said, “The downward pressure on the yield curve continues to reflect tame inflation expectations as well as sustained heavy liquidity conditions in the market,”.
The Central Bank Of Africa added that, “A well-funded market, has enhanced the stampede to government securities at a time when private sector credit growth remains debilitated.”
In June 2019, the urge for new borrowing from the domestic market was dampened by the large inflow of foreign debt via the Eurobond issued in mid-May 2019, which raised 210 billion Kenyan Shillings.
The total domestic debt did not go down with the stock of Treasury bills, however, as the Kenyan government increased its use of the overdraft facility at the Central Bank Of Kenya.
The overdraft rose from 35.97 billion Kenyan Shillings at the end of May 2019, to 57.33 billion Kenyan Shillings at the end of June 2019.
