CBK may limit direct sales of treasury bonds

Apr 07, 2011

Direct sales of treasury bonds to large banks and cash-rich institutional investors could be limited by the Central Bank of Kenya (CBK).

It is hoped that the move will mean banks have less control over public debt offers, allowing greater State borrowing, Business Daily Africa reports.

At present, buyers submit their bid directly during government bonds auctions.

If the changes are introduced it will give international investment banks the opportunity to become primary buyers, meaning the bonds can be traded on secondary markets.

However, many local commercial institutions believe the new rules will reduce their margins as they rely on trading treasury bonds to increase profits, the news provider continued.

CBK Governor Njuguna Ndung'u also revealed that an over-the-counter trading platform could be established to work alongside the existing exchange-traded method.

The most recent figures from the institution, released on March 28th, show the total amount received for savings bonds during the last sale period was 25.9 billion shillings (€214 million).