Kenya has reduced the amount of money it seeks to borrow from the domestic market in December as the uptake of government securities decline following the repeal of a law capping interest rates.
The East African nation is seeking to raise 25 billion shillings (250 million U.S. dollars) this month from the domestic market through a five-year bond, half the amount Treasury has been floating in the past months.
“The Central Bank of Kenya, acting in its capacity as the fiscal agent for the Republic of Kenya, invites bids for five-year 250 million Treasury bond for budgetary support,” said the Central Bank in an announcement on Monday.
In November, the government through the apex bank floated a Treasury bond worth 500 million dollars, and in October 600 million dollars and September 500 million dollars.
The reduction in the amount came after massive under-subscription of the government securities last week as banks kept off the market after the caps on interest rates were abolished.
Commercials banks in the East African nation have been the biggest buyers of the papers since 2016 after shifting to government securities to make up for low-interest rates in the market.
Analysts noted that by reducing the amount of cash it seeks from the domestic market, the government is adjusting to the new realities in the market. Enditem