Govt seeks to borrow Ksh 50B from domestic market – KBC

Govt seeks to borrow Ksh 50B from domestic market – KBC
Treasury CS Ukur Yatani said the government will this year borrow 150 billion shillings from the domestic market

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The Government is seeking to borrow 50 billion shillings from the domestic market for budgetary support.

The five year and ten year fixed re-opened fixed coupon will attract rate of 11.304 percent and 12.438 percent respectively.

The National Treasury had indicated that it is seeking to raise 289 billion shillings to plug the 607.8 billion shillings budget deficit following projections that the Kenya Revenue Authority was likely to miss revenue targets in the fiscal year.

The government is once again seeking raid the local market in a bid to raise 50 billion shillings this despite under subscription of government bonds in the recent weeks as financial institutions which are the biggest investors in government securities retracted back to loans.

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This has been necessitated by repeal of interest rate cap last year.

According to CBK out of the 24 billion shillings worth of treasury bills issued late last month the government received slightly over 4 billion shillings rising fears that the   government might default on its loans.

The minimum subscription for the two issues is set at 50,000 shillings. The 5 year bond will attract an 11.304 percent interest per annum while the ten year will attract 12.438 percent interest with the interests repayment for both loans set to start on 24 next month.

To woo more subscriptions the as a possible last resort the bond will be rediscounted at 3 percent above the higher of prevailing market yield or coupon price.

Though the central bank did not expound on where exactly the money targeted will be channeled to, the fixed 5- and 10-year bonds are is expected to be part of the 289 billion shillings the government seeks to raise from the local market to fill part of the 607 billion shillings deficit with the remaining to be borrowed from foreign markets.

Last week Treasury Cabinet secretary Ukur Yatani said the government will this year borrow 150 billion shillings from the domestic market.

The money raised from the venture Yatani said will go towards funding only projects with diverse multiplying effects such as agriculture and manufacturing.

The 50 billion shillings loan is will further aggravate Kenya domestic debt towards the 3 trillion shillings mark.

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