Kenya is seeking to borrow 300 million U.S. dollars from the domestic market in its latest sale of Treasury bonds.
The Central Bank of Kenya (CBK) said on Wednesday that the money to be raised in about 10 days, and will help fund the country's 2.3 billion U.S. dollar budget, the largest ever, which is to be unveiled today in Parliament.
The 300 million dollars will be raised through two Treasury bonds -- a two-year re-opened bond with a 12 percent interest and a 15-year bond whose yield stands at 11 percent.
Last week, the CBK accepted bids worth 200 million dollars from the three bills, over 40 million dollars than it had sought, as investors scrambled for the securities whose interest rates range from 7 to 11 percent.
The intensified borrowing will push up Kenya's domestic debt that currently stands at 17.2 billion dollars or 29 percent of the Gross Domestic Product (GDP).
Treasury attributes the sharp increase in internal debt to a spike in interest rates, which has made investment in debt securities attractive.
Investors have shown great interest mainly in the short-term papers as opposed to bonds, heaping pressure on repayment of yields.
The east African nation's overall public debt stands at 33 billion dollars or 60 percent of the country's GDP. The external debt comprises of 51 percent of the total debt or 31 percent of the GDP.
The key driver of growth in external debt has been a disbursement of two-year syndicated loan from commercial banks two months ago, according to Treasury.
source : xinhua