Central Bank of Kenya
Genghis Capital
Sh297.03 billion

Treasury turns away Sh30bn as investors target 1-year bill

The preference by investors for the one-year government paper continued for the tenth consecutive session as the Treasury turned away Sh30 billion. However, the weekly Treasury bills auction saw the 91-day bill getting little attention.

Last week, the paper attracted Sh32.28 billion against an offer of Sh10 billion, recording 322.89 per cent subscription rate. The Treasury only accepted Sh7.82 billion from investors. The 364-day paper preference has averaged Sh19.22 billion in the last nine auctions.

Liquidity in the money market was demonstrated by the overall oversubscription rate which came in at 210.46 per cent.

Analysts said this has been propelled by banks’ uptake with a dearth of short-term bond issues at the primary auctions.

“With government borrowing target ahead of the curve (at Sh297.03 billion at end of May against Sh269.32 billion pro-rated target), we view the strategy till the end of the current financial 2017/18 will be to curb rise in rates,” said analyst at Genghis Capital in an email response.

The Treasury rejected bids worth Sh30.05 billion from investors who had bid Sh50.5 billion in the auction. It accepted bids worth Sh20.45 billion, with redemptions of Sh16.95 billion. Central Bank of Kenya (CBK) latest data shows that the lack of demand for money by the government is also pulling interest rates downwards.

Yields for the 91-, 182-, and 364-day papers came in at 7.850 per cent, 10.061 per cent and 10.949 per cent respectively.

The 91-day paper was the least attractive to investors recording a subscription rate of only 21.88 per cent after receiving bids worth Sh875.02 million against an offer of Sh4 billion.

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