State revels in cheap credit as banks reel from rate cap law

Traders view the trading board at the Nairobi Securities Exchange. Banks are doing brisk business from trading in State-issued bonds. [File, Standard]

Commercial banks have flooded the Government with cheap credit that has now become Treasury’s preferred funding source at the expense of Central Bank’s overdraft facility.

In last week’s auction, the 91-day Treasury Bill (T-bill) got 381 per cent performance rate, while the 182-day paper got 255 per cent interest and the 364-day bill received 94 per cent subscription. The banks’ overwhelming interest in Government’s debt instruments has aided Treasury make the most of the readily available cheap credit.