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Treasury seeks Sh40 billion in new bonds

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The Treasury headquarters in Nairobi. FILE
The Treasury headquarters in Nairobi. FILE PHOTO | NMG 

The Treasury is in the market for Sh40 billion through two- and 15-year bonds, with the shorter tranche likely to satisfy the pent up demand for short-term paper in the market.

Issuance of the short bond is also indicative of the need to ramp up domestic borrowing in light of an upward revision of targets amid the taxman’s underperformance in revenue collection.

The Central Bank of Kenya (CBK) said in the bond prospectus that coupon rates for both the 15- and two-year tranches will be market determined.

Investor appetite for recent bonds has been lukewarm due to the longer tenors on offer which, coupled with the CBK rejecting expensive bids, has led to a shortfall in domestic borrowing.

The Treasury has also revealed that revenue performance for the first five months of the fiscal year was below target, piling pressure to raise cash through the debt market to fund continuing budgetary obligations.

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“The latest National Treasury report indicates that tax revenue in the fiscal year 2018/19 at the end of November hit Sh555.66 billion with the monthly collection at Sh116.16 billion. Overall, the tax revenue performance fell short by Sh113.34 billion against its pro-rated target,” said Genghis Capital in a fixed income note. At the same time, Treasury bill auctions have been undersubscribed for the past two months.

In last week’s sale, the T-bills subscription rate was 65 per cent. The CBK accepted Sh10.9 billion of the Sh15.6 billion worth of bids received, out of the target of Sh24 billion.

The tap sale of last month’s Sh40 billion 10-year bond that closed on December 27 was also undersubscribed, netting the government Sh6.6 billion from a target of Sh13.8 billion.

The initial sale of the bond earlier last month had netted Sh26.2 billion.

The January bond is, however, being sold amid improving liquidity in the market following a relatively tight December which — coupled with the short-tenor option— should help in attracting bids. The Interbank rate has come down from a high of 11.3 per cent in mid-December to 6.7 per cent, indicating that liquidity is rising.

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World Bank pushes G-20 to extend debt relief to 2021

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World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.

“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.

He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.

The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.

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People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.

For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.

Debt burdens, already unsustainable for many countries, are rising to crisis levels.

“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.

ALSO READ:Global Economy Plunges into Worst Recession – World Bank

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Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans

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The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.

“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”

According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.

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Tighter Reins on Platforms for Mobile Loans

The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.

Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.

Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.

SEE ALSO: Central Bank Unveils Measures to Tame Unregulated Digital Lenders

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Scope Markets Kenya customers to have instant access to global financial markets

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NAIROBI, Kenya, Jul 20 – Clients trading through the Scope Markets Kenya trading platform will get instant access to global financial markets and wider investment options. 

This follows the launch of a new Scope Markets app, available on both the Google PlayStore and IOS Apple Store.

The Scope Markets app offers clients over 500 investment opportunities across global financial markets.

The Scope Markets app has a brand new user interface that is very user friendly, following feedback from customers.

The application offers real-time quotes; newsfeeds; research facilities, and a chat feature which enables a customer to make direct contact with the Customer Service Team during trading days (Monday to Friday).

The platform also offers an enhanced client interface including catering for those who trade at night.

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The client will get instant access to several asset classes in the global financial markets including; Single Stocks CFDs (US, UK, EU) such as Facebook, Amazon, Apple, Netflix and Google, BP, Carrefour;  Indices (Nasdaq, FTSE UK), Metals (Gold, Silver); Currencies (60+ Pairs), Commodities (Oil, Natural Gas).

The launch is part of Scope Markets Kenya strategy of enriching the customer experience while offering clients access to global trading opportunities.

Scope Markets Kenya CEO, Kevin Ng’ang’a observed, “the Sope Markets app is very easy to use especially when executing trades. Customers are at the heart of everything we do. We designed the Scope Markets app with the customer experience in mind as we seek to respond to feedback from our customers.”

He added that enhancing the client experience builds upon the robust trading platform, Meta Trader 5, unveiled in 2019, enabling Scope Markets Kenya to broaden the asset classes available on the trading platform.

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