Retail investors in government securities redeemed Sh30.8 billion worth of maturing debt in the week to June 24, cutting their total holdings of State debt by 11 percent.
The Treasury registered bond maturities worth Sh67 billion in June from a 15-year bond paper sold in 2007 and a 10-year bond floated in 2012.
Retail investors, including saccos, listed and private companies, self-help groups, educational institutions, religious institutions, and individuals, accounted for nearly half of these maturities despite holding just 5.9 percent or Sh251 billion worth of total government domestic debt which stands at Sh4.27 trillion.
These investors have been raising their holdings of government debt at a faster pace than all other classes of buyers since the Covid-19 pandemic struck the country, seeking better returns with less volatility after alternative options such as property and equities fell on hard times.
The introduction of the M-Akiba mobile bond in 2018 also ushered in more retail investors, who subsequently continued to participate in this segment through the secondary market at the NSE.
The higher than average share of maturities in the two bonds last month indicates that the retail investors had bought up the papers in the secondary market, or participated in re-openings in recent years.
The June maturities also cut the overall government domestic debt by a similar margin of Sh67 billion — falling from Sh4.333 trillion on June 17 to Sh4.266 trillion on June 24 — indicating the government was struggling to roll over this debt.
The liquidity injection into the open market would have, therefore, found its way into the other asset classes such as equities, which have in the past week seen a mini-resurgence on the back of higher domestic demand for shares.
The bourse, which had sunk to lows last seen in 2003 in mid-June on the back of foreign investor selling, saw its All Share Index rise by 6.6 percent last week to 117 points while adding Sh120.8 billion in investor wealth.
Traded turnover during the week rose by 25 percent to Sh2.65 billion, signalling higher demand from investors looking to enter the market at a discount due to the prevailing low share prices.