Government securities plan changed

By JOHN OYUKE

The Central Bank of Kenya (CBK) has announced changes in the issuance structure of Government securities in the primary market.

The arrangement has been revised to align domestic borrowing plan of Government and deepen market for government securities.

Director, Financial Markets Department, Mr Gerald Nyaoma said following the action, 91-days Treasury Bill would, be issued weekly on Thursdays.

On the other hand, the 182-Days Treasury Bills would be issued bi-weekly on Wednesdays while the 364–Days Treasury Bill would also be issued on Wednesdays but Monthly.

DISCOUNTED BILL

Treasury Bonds, a public notice by the Government fiscal agent added, would also be issued monthly on Wednesdays.

Nyaoma said the maximum allowable amount for non-competitive bids has also been revised upwards to Sh20 million from the current amount of Sh10 million.

This, he added, applies to both Treasury Bills and Treasury Bonds.

The bank also plans to raise Sh7.5 billion in the one-year discounted bill.

The 364 days Treasury bill would be auctioned tomorrow.

As for other Treasury bills, the paper is issued at a discounted price, implying that investor’s return is the difference between face value (par price) and cost (discount price).

The instrument qualifies for secondary market transactions such as transfers, lien creation, and repos (both vertical and horizontal), according to CBK.

In addition, the paper will be traded Over-The-Counter (OTC), without being listed at the Nairobi Stock Exchange.

GOVERNMENT OVERDRAFT

Meanwhile, the cumulative Government expenditure on interest and other charges on domestic debt as at January 07, 2011 of the fiscal year 2010/11 amounted to Sh34.2 billion.

This is, the CBK disclosed, compared with Sh31.2 billion in a similar period of the fiscal year 2009/10.

The interest cost on domestic debt during the period was on account of interest and other charges on Treasury bills and Treasury bonds amounting to Sh 6.8 billion and 26.9 billion, respectively.

Interest on Government overdraft at the CBK amounted to Sh0.5 billion. The Gross Government debt increased by Sh52.5 billion from Sh660.3 billion in June 2010 to Sh712.7 billion as at January 07, 2011 with the increase dominated in Treasury bonds at Sh81.3 billion.