Apex bank says Govt. to borrow $300m from domestic market

The Central Bank of Kenya (CBK) on Wednesday said the country was seeking to borrow 300 million dollars from the domestic market in its latest sale of Treasury bonds.

The CBK said that the money to be raised in about 10 days, and would help fund the country's 2.3 billion dollar budget, the largest ever, which would be unveiled today in Parliament.

The 300 million dollars would be raised through two treasury bonds, a two-year re-opened bond with a 12 per cent interest and a 15-year bond whose yield stood at 11 per cent.

On Friday, the CBK accepted bids worth 200 million dollars from the three bills, over 40 million dollars than it had sought, as investors scrambled for the securities whose interest rates range from 7 to 11 per cent.

``The intensified borrowing will push up Kenya's domestic debt that currently stands at 17.2 billion dollars or 29 per cent of the Gross Domestic Product (GDP).

``Treasury attributes the sharp increase in internal debt to a spike in interest rates, which has made investment in debt securities attractive.

``Investors have shown great interest mainly in the short-term papers as opposed to bonds, heaping pressure on repayment of yields,’’ CBK said.

According to Treasury, the key driver of growth in external debt has been a disbursement of two-year syndicated loan from commercial banks two months ago.