364-Day Yield Extends Three-Week Rise as Redemptions Drive Heavy Oversubscription

The 364-day Treasury bill has posted a third straight rise in its weighted average rate, the first such streak since the August 2024 peak.

• •The rate has moved from 9.3454% on 10 November to 9.3789% on 24 November.
• •The move breaks a long easing cycle and sets the tenor as the clearest signal of shifting sentiment in the bills market.
• •The combination of rising yields, persistent oversubscription, and heavy redemptions shows a market positioning for rate stability ahead of 2026.

Demand remains strong despite the higher rate. The tenor has been oversubscribed for four consecutive auctions, with bids between KSh 20 billion and KSh 25.7 billion against a steady KSh 10 billion offer. Bid coverage has held above 200% each week.

This strength is driven by a heavy redemption cycle with maturities on the long end have ranged between KSh 17.2 billion and KSh 28.2 billion across the four auctions, creating a steady reinvestment flow that is supporting subscription levels.

Accepted amounts track this pattern and the CBK has taken in between KSh 20.8 billion and KSh 25.7 billion in each auction, matching rollover needs. Net borrowing has stayed low, ranging from KSh 1.18 billion to KSh 7.91 billion. This shows disciplined issuance, with the auction serving mainly as a rollover mechanism rather than a source of fresh cash.

Liquidity has remained high, and investors are securing long-end rates while they remain elevated. The short and mid tenors are stable, leaving the 364-day paper as the main driver of the current adjustment in the T-bill curve.

Recent 364-Day Auction Summary