The share of the government’s domestic debt held by individuals and other non-financial institutions increased 38% or Sh74 billion in a year as the investors pursued high returns from the fixed income securities.
Central Bank of Kenya data shows the investors classified as “other” held 6.44% of total domestic debt in the first week of April. Total domestic debt stood at Sh4.176 trillion in the period. Their share increased from 5.46% (Sh194.94 billion) a year ago when the total domestic debt was Sh3.57 trillion.
Treasuries have become even more attractive over the past two years when returns from other asset classes including real estate and listed equities have suffered due to the Covid-19 pandemic and more recently the impact of Russia’s invasion of Ukraine. Banks, pension funds, and insurers also joined individuals in the purchase of more treasuries. Banks and pension funds are the largest local lenders to the government, holding 49.08% (Sh2.049 trillion) and 31.86% (Sh1.33 trillion) of domestic debt respectively.
Despite a drop in proportion held by the banks from 52.01 percent, their lending to the government increased by Sh192.83 billion over the year to April 8. Insurance firms and parastatals account for 6.89% (Sh287.75 billion) and 5.73% (Sh239.31 billion) respectively.
Their debt holdings addition grew by Sh52.82 billion and Sh41.15 billion respectively. The government plans to make net new borrowing of Sh581.7 billion in the next fiscal year to fund the budget.
