Why Treasury Wants to Take Over Issuance of Bonds, T-Bills from the CBK

In Summary

• Treasury plans to take over bond and T-bill issuance from CBK to reduce borrowing costs and improve debt management.
• TransCentury reports a Ksh375 million profit, driven by revenue growth, tax credits, and non-core asset sales.
• TSC receives nearly 190,000 applications for 25,288 promotion slots, highlighting career stagnation concerns among teachers.
• HF Group’s Ksh4.6 billion rights issue oversubscribed, raising Ksh6.38 billion to fund growth and digitization.
• Afreximbank earns Africa’s first "AAA" credit rating, boosting its ability to raise competitively priced capital.
• KNBS to separate volatile items like food and fuel from core inflation data for clearer cost-of-living insights.

The Kenyan Treasury plans to take over the issuance of Treasury bills and bonds from the Central Bank of Kenya (CBK) through the Public Debt Management Office (PDMO) to lower borrowing costs and enhance debt management. According to the Business Daily, this move, inspired by global practices, aims to achieve rates below 10% and give PDMO autonomy in managing public debt. However, the CBK is expected to resist, citing concerns over the impact on fiscal and monetary policy coordination. Kenya’s domestic debt currently stands at Ksh5.89 trillion, with Treasury bonds accounting for 85%.

TransCentury has achieved a remarkable turnaround, reporting a Sh375 million net profit in the first half of 2024, driven by a stronger Kenya shilling, tax credits, non-core asset disposals, and a 12% revenue increase to Sh3 billion. Following years of losses and challenges, including negative equity and delayed financial reporting, the announcement fueled a 31% surge in its share price to Sh0.72, underscoring renewed investor confidence. However, rising operating and finance costs remain a concern for the embattled infrastructure firm as it works to solidify its recovery as reported by The Standard.

The Teachers Service Commission (TSC) received 189,948 applications for 25,288 promotion slots, reflecting high demand for career advancement among Kenyan educators. The vacancies include 16,109 positions for primary schools and 9,179 for post-primary institutions, with interviews scheduled through January and February 2025. According to the Business Daily, this surge follows calls by the Kenya Union of Post Primary Education Teachers (Kuppet) to address career stagnation affecting over 130,000 teachers, which they say has led to demoralization. The promotions also aim to fill administrative roles left vacant over time.

HF Group’s Ksh4.6 billion rights issue was oversubscribed, attracting Sh6.38 billion from investors eager to back its growth strategy. CEO Robert Kibaara revealed 85% of the funds will scale up profitable businesses, with 15% allocated to technology and digitization. The issue offered shareholders two new shares per existing share at Ksh4, with a green shoe option accommodating the oversubscription. According to Capital Business, the success strengthens the Group's capital position, with its banking arm, HFC, now holding Sh8 billion in capital—exceeding regulatory requirements and positioning itself to meet the Sh10 billion target by 2028.

In a report by the Business Daily, Afreximbank has received a "AAA" issuer credit rating with a stable outlook from China Chengxin International Credit Rating Co., making it the first African multilateral financial institution to achieve this milestone. The rating highlights the bank's strong strategic positioning, risk management, profitability, and liquidity, reinforcing its relevance in Africa. This recognition strengthens Afreximbank's ability to raise competitively priced capital and diversify funding partnerships as it pursues its developmental mandate across the continent.

Starting next month, the Kenya National Bureau of Statistics (KNBS) will separate food, fuel, and transport price changes from other consumer items in inflation calculations. This move aims to provide clearer insights into the cost of living. The change aligns with the East African Community's standards and helps the Central Bank of Kenya (CBK) better regulate prices using core inflation data, which excludes volatile items like food and fuel. According to the Business Daily, by distinguishing between core and non-core inflation, stakeholders can better understand price trends and make informed policy decisions.