Investor appetite for the 364-day Treasury bill has surged, with the tenor recording successive oversubscriptions since the re-opening of the 30-year infrastructure bond in early September.
- •In the 8 September 2025 auction, the 364-day paper attracted KSh 23.10 billion in bids against an offer of KSh 10.00 billion, representing a performance rate of 231%.
- •The Central Bank of Kenya (CBK) accepted KSh 19.08 billion, with a weighted average rate of 9.5790%, slightly up by 0.99 basis points from the previous week.
- •A week later, in the latest auction, demand remained strong with KSh 20.23 billion received for the same tenor.
CBK accepted KSh 11.06 billion at a lower yield of 9.5483%, showing a drop of 3.07 basis points but sustaining the bond’s dominance in both subscription volume and allocation.
Why Investors Are Piling In
The strong interest in the 364-day bill comes amid a declining rate environment, following the CBK Monetary Policy Committee’s decision to cut the Central Bank Rate (CBR) to 9.50%. Investors are moving quickly to lock in yields that are now approaching parity with the CBR, anticipating further easing that may compress returns on short-term debt.
Meanwhile, the long-duration SDB1/2011/030 bond, re-opened in the same period, received muted demand. It attracted only KSh 8.07 billion in bids, with just KSh 2.40 billion accepted, marking a weak 40.35% performance rate despite its 13.96% average yield.
This contrast indicates risk aversion among investors, who are favoring shorter maturities with attractive rates over long-dated bonds that come with significant duration risk.
As the rate environment continues to shift, the market is clearly signaling a preference for instruments that combine safety, liquidity, and yield proximity to the benchmark policy rate.
