Kenya’s National Treasury has raised Ksh.53.7 billion from the local market against a projected target of Ksh 40 billion in November’s primary bond sale.
This represents a 140 percent performance rate for the re-opened bonds; FXD2/2013/15 (7.50 years to maturity) and FXD1/2018/20 (17.4 years to maturity).
The weighted average rate of accepted bids for the pair of bonds traded at 11.44 and 13.24 percent respectively in line with Central Bank of Kenya’s targeted coupon rates of 12 and 13.2 percent.
Treasury projects to borrow Ksh.600 billion from the domestic markets by June next year and has since raised Ksh.152.4 billion through the first quarter of the fiscal year to September.
Analysts say Kenya’s Ksh 524 billion domestic debt target may be scaled further up towards Ksh 600 billion as revenues grossly underperform.
In the three months to September 2020, revenues declined by 15% compared to a year before.
On the other hand, NCBA Analysts noted that the emergency spending in response to the coronavirus pandemic coupled with tax losses has propelled Kenya’s debt levels to a record high.
The IMF expects that Debt/GDP ratio will surpass the 70% sustainability threshold by 2021 due to increased borrowing as well as foreign exchange adjustments.
“Going forward, the role of fiscal policy in promoting recovery through public investments and business stimulating reforms cannot be gainsaid. However, this may be accompanied by further deterioration in revenues, sustaining the reliance on debt in the near term,” NCBA said in its October Economic Report.
52% of Kenya’s public debt is externally sourced, and about 40% of that external debt is commercial.
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