The interest rate on the 91-day Treasury bill fell by the largest weekly margin in nine and a half years in the latest auction, giving the clearest signal yet that interest rates on government debt are set to come down.
Weekly auction results posted by the Central Bank of Kenya (CBK) on Thursday showed that the average rate on the shortest of the three T-bills (91 days) fell to 15.73 percent from 16.72 percent the previous week.
The week-on-week decline of nearly one percentage point is the biggest seen since the auction of November 16, 2015, when the rate fell from 13.76 percent to 9.65 percent.
The rate on the one-year T-bill also fell during last week’s auction, retreating to 16.53 percent from 16.98 percent —where it had been over the previous five weeks. On the 182-day paper, the rate represented a negligible decline to stand at 16.86 percent.
The fall in short-term rates has been driven by the improvement of the government’s fiscal outlook following the partial refinancing of the $2 billion 2014 Eurobond in February—the bond matures in June— and anticipated external loan inflows from the International Monetary Fund (IMF) and the World Bank before the end of June.
Recent bond sales have also been oversubscribed, helping the Treasury stay ahead of target on its domestic borrowing programme for the current fiscal year.
Before the Eurobond refinancing, there were concerns about the government’s ability to repay the debt, which when combined with the heavy borrowing needed to finance the current budget, had made investors place a high-risk premium on the government’s securities.
Speaking after the April 3 monetary policy committee meeting, CBK governor Kamau Thugge said that the regulator expects that domestic rates have now peaked while attributing the rise over the previous months to the government’s overreliance on domestic financing.
In the auction last week, investors signalled the falling risk concerns by spreading their bids more evenly across all three tenors, a departure from recent auctions where they have tended to heavily concentrate on the 91-day paper to minimise duration exposure to debt.
They also sought short exposure to have flexibility to take advantage of rising interest rates.
The 364-day paper attracted the highest value of bids last week at Sh19.3 billion, out of which the CBK took up Sh18.8 billion.
The 182-day recorded bids worth Sh10.56 billion, with Sh10.51 billion being taken up by CBK, while the 91-day raised offers of Sh16.41 billion and acceptances of Sh16.38 billion.
The weekly auction usually targets Sh24 billion.
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Air Tanzania Banned From EU Airspace Due to Safety Concerns
Several airports have since locked Air Tanzania, dealing a severe blow to the Tanzanian national carrier that must now work overtime to regain its certification or go the wet lease way
The European Commission has announced the inclusion of Air Tanzania on the EU Air Safety List, effectively banning the airline from operating in European airspace.
The decision, made public on December 16, 2024, is based on safety concerns identified by the European Union Aviation Safety Agency (EASA), which also led to the denial of Air Tanzania’s application for a Third Country Operator (TCO) authorisation.
The Commission did not go into the specifics of the safety infringement but industry experts suggest it is possible that the airline could have flown its Airbus A220 well past its scheduled major checks, thus violating the airworthiness directives.
“The decision to include Air Tanzania in the EU Air Safety List underscores our unwavering commitment to ensuring the highest safety standards for passengers in Europe and worldwide,” said Apostolos Tzitzikostas, EU Commissioner for Sustainable Transport and Tourism.
“We strongly urge Air Tanzania to take swift and decisive action to address these safety issues. I have offered the Commission’s assistance to the Tanzanian authorities in enhancing Air Tanzania’s safety performance and achieving full compliance with international aviation standards.”
Air Tanzania has a mixed fleet of modern aircraft types including Boeing 787s, 737 Max jets, and Airbus A220s.
It has been flying the B787 Dreamliner to European destinations like Frankfurt in Germany and Athens in Greece and was looking to add London to its growing list with the A220.
But the ban not only scuppers the London dream but also has seen immediate ripple effect, with several airports – including regional like Kigali and continental – locking out Air Tanzania.
Tanzania operates KLM alongside the national carrier.
The European Commission said Air Tanzania may be permitted to exercise traffic rights by using wet-leased aircraft of an air carrier which is not subject to an operating ban, provided that the relevant safety standards are complied with.
A wet lease is where an airline pays to use an aircraft with a crew, fuel, and insurance all provided by the leasing company at a fee.
Two more to the list
The EU Air Safety List, maintained to ensure passenger safety, is updated periodically based on recommendations from the EU Air Safety Committee.
The latest revision, which followed a meeting of aviation safety experts in Brussels from November 19 to 21, 2024, now includes 129 airlines.
Of these, 100 are certified in 15 states where aviation oversight is deemed insufficient, and 29 are individual airlines with significant safety deficiencies.
Alongside Air Tanzania, other banned carriers include Air Zimbabwe (Zimbabwe), Avior Airlines (Venezuela), and Iran Aseman Airlines (Iran).
Commenting on the broader implications of the list, Tzitzikostas stated, “Our priority remains the safety of every traveler who relies on air transport. We urge all affected airlines to take these bans seriously and work collaboratively with international bodies to resolve the identified issues.”
In a positive development, Pakistan International Airlines (PIA) has been cleared to resume operations in the EU following a four-year suspension. The ban, which began in 2020, was lifted after substantial improvements in safety performance and oversight by PIA and the Pakistan Civil Aviation Authority (PCAA).
“Since the TCO Authorisation was suspended, PIA and PCAA have made remarkable progress in enhancing safety standards,” noted Tzitzikostas. “This demonstrates that safety issues can be resolved through determination and cooperation.”
Another Pakistani airline, Airblue Limited, has also received EASA’s TCO authorisation.
Decisions to include or exclude airlines from the EU Air Safety List are based on rigorous evaluations of international safety standards, particularly those established by the International Civil Aviation Organization (ICAO).
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The process involves thorough review and consultation among EU Member State aviation safety experts, with oversight from the European Commission and support from EASA.
“Where an airline currently on the list believes it complies with the required safety standards, it can request a reassessment,” explained Tzitzikostas. “Our goal is not to penalize but to ensure safety compliance globally.”
Airlines listed on the EU Air Safety List face significant challenges to their international operations, as the bans highlight shortcomings in safety oversight by their home regulatory authorities.
For Air Tanzania, this inclusion signals an urgent need for reform within Tanzania’s aviation sector to address these deficiencies and align with global standards.
The path forward will require immediate and sustained efforts to rectify safety concerns and regain access to one of the world’s most critical aviation markets.
Source: allafrica.com
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