Sharp Daily
No Result
View All Result
Friday, June 6, 2025
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team
Sharp Daily
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team
No Result
View All Result
Sharp Daily
No Result
View All Result
Home News

Government faces strain amid skyrocketing T-bill subscriptions

Joshua Otieno by Joshua Otieno
January 12, 2024
in News
Reading Time: 2 mins read

The auction results for the week on treasury bills were disclosed in a release by the Central Bank of Kenya on Thurday. Government papers experienced oversubscription throughout the week, with an overall oversubscription rate of 241.5%.

Particularly noteworthy was the 91-day treasury bill, witnessing an extraordinary oversubscription rate of 1,114.4% and a market-determined rate of 16.1%. This indicates a significant investor demand for higher rates to lend money to the government for a mere three months, approaching the record high of 22.5% observed in October 2015.

Simultaneously, redemptions and rollovers for government papers during the week totaled KES 42.9 billion, with the 91-day treasury bill accounting for KES 36.4 billion. Redemptions signify the maturity of existing T-bills, necessitating the government to repay the principal to investors, while rollovers involve issuing new T-bills to replace maturing ones, effectively refinancing the debt.

These results depict a scenario where investors perceive the market as volatile and risky in the long term, prompting a preference for short-term investments. Investors are attracted to the potential of earning significant yields within a relatively brief period, providing flexibility and liquidity for potential reinvestment or adjustments in response to market changes.

RELATEDPOSTS

Kenya’s Treasury Bill percentage hits historic low

March 8, 2024

However, for the government, these results highlight a complex situation. The surge in subscription rates for the 3-month T-bills, combined with high yields and substantial redemptions, exerts considerable strain on government finances. Some economists interpret this as a manifestation of government desperation to secure funding at any cost, much of which goes towards servicing previous debt.

As this financial landscape unfolds, questions arise about when and how this trend will cease. Investor behavior is influenced by various factors, including economic indicators, regulatory changes, and global trends. While investors buying the 3-month paper may find it a justifiable move, the government faces the ongoing challenge of balancing immediate fiscal needs with the long-term sustainability of its financial position.

Following last month’s increase in the Central Bank Rate, the yield for these papers is likely to rise further. This, coupled with continuous demand for short-term papers and market volatility, raises serious questions about the sustainability of this trend. The government must take measures to alleviate the financial burden associated with high-interest short-term loans, ultimately emphasizing the need to enhance the overall health of the economy.

 

Previous Post

Badili company secures funding for affordable refurbished phones

Next Post

Dr King’ori announces the end of The Wicked Edition on NTV Kenya

Joshua Otieno

Joshua Otieno

Related Posts

News

Co-op Bank posts KES 6.9 billion profit in Q1’2025

May 16, 2025
Agriculture And Economy
News

Lets get Kenya out of FATF list

May 9, 2025
News

The downside of Impact Investing

May 2, 2025
News

Leadership challenges at the University of Nairobi

April 24, 2025
News

Easter eggs and earnings: Growing your nest egg with CMMF

April 16, 2025
News

Geoffrey Ruku declares KES 377M net worth during CS vetting

April 15, 2025

LATEST STORIES

How Kenya’s E-Mobility shift could redefine urban planning

June 5, 2025

Economic liberators are the real heroes and heroines of the year

June 5, 2025

Affordable retirement planning for small businesses with CURBS

June 5, 2025

How Kenyan banks can modernize without marginalizing

June 4, 2025

Human rights concerns over activists’ treatment in Tanzania

June 4, 2025

Decoding stock-based compensation

June 4, 2025

Comparative advantage is the secret to real economic take off

June 4, 2025

Understanding inflation and its impact on everyday life

June 4, 2025
  • About Us
  • Meet The Team
  • Careers
  • Privacy Policy
  • Terms and Conditions
Email us: editor@thesharpdaily.com

Sharp Daily © 2024

No Result
View All Result
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team

Sharp Daily © 2024