The Kenya Pension Fund Investment Consortium, whose members control about $2.63 billion in assets under management, says it has identified 17 infrastructure projects in the water, energy, affordable housing and roads sectors that are viable for investment. PHOTO | PSCU For pension funds, long-term bonds align more closely with their long-term investment outlook, unlike banks which prefer shorter dated paper due to their shifting liquidity needs and the short term nature of deposits.
Kenya’s Treasury has largely floated longer dated bonds this year in an effort to lengthen the maturity profile of domestic debt and reduce refinancing risk for the exchequer.
The pension funds have also been looking at other investment options, including public projects.
Kenya pension funds recorded the biggest growth in lending to government in 2021, helped by the National Treasury’s consistent issuance of long-term bonds, which favour their investment preferences.
Central Bank of Kenya (CBK) data shows that pension funds grew their holdings of government debt by $1.8 billion to $11.05 billion between January 1 and December 17, ahead of banks, whose holdings went up by $1.55 billion to $17.9 billion.
Total domestic public debt stood at $35.54 billion in December, up from $30.63 billion in January, with the share held by pension funds going up from 30.3 percent to 31.3 percent in the period. Banks in the meantime saw their share of domestic debt fall from 53.3 percent to 50.3 percent.
For pension funds, long-term bonds align more closely with their long-term investment outlook, unlike banks which prefer shorter dated paper due to their shifting liquidity needs and the short term nature of deposits.
Kenya’s Treasury has largely floated longer dated bonds this year in an effort to lengthen the maturity profile of domestic debt and reduce refinancing risk for the exchequer. Maintaining stability
CBK Governor Patrick Njoroge said at the end of November that the average time to maturity for Treasury bonds has lengthened to nine years from 7.5 years in June 2019.
The government has also cut the amount of debt held in form of short term Treasury bills — largely used by banks for liquidity management — to 18 percent from 24.6 percent in January.
“It has helped maintain stability in the yield curve. The ratio of T-bills to bonds has also fallen…a remarkable achievement in terms of stability in government’s borrowing programme,” said Dr Njoroge.The pension funds have also been looking at other investment options, including public […]