The Central Bank of Kenya(CBK) has shortened the auction time this coming Thursday to 10 am from the usual 2 pm, 24th December 2020. This is due to the Christmas holiday that falls on the following day.
The Government’s fiscal agent will be offering TBills worth KSh 24 Billion at this next auction as it seeks KSh 17.5 Billion in new borrowings and KSh 6.5 Billion for redemptions.
During the last Weekly Treasury Bills Auction, the Central Bank of Kenya(CBK) accepted bids worth KSh 21.3 Billion at the last Treasury Bills Auction where KSh 24 Billion was offered an under subscription of 90.4%.
This is the highest performance at the auctions over the past four weeks, with investors giving the Treasury Bills a wide berth in preference to the longer tenor Treasury Bonds.
The 91-day Treasury Bill recorded an oversubscription of 215.8%, with the CBK receiving bids for this tenor at KSh 8.6 Billion, accepting almost the entire amount at KSh 8.5 Billion.
The 182 days Treasury Bills worth KSh 10 Billion attracted bids worth KSh 7.9 Billion, with the CBK accepting the entire amount, representing a performance of 78.57%.
The 364 days Treasury Bill recorded the lowest performance, accepting KSh 4.9 Billion out of the KSh 10 Billion on offer, an undersubscription of 52.07%.
The CBK offered an interest rate of 6.916%, 7.399%, and 8.283% for the 91-day, 182, and 364 days Treasury Bills. This is compared to 6.901%, 7.363%, and 8.246% for the three sets of Treasury Bills, respectively, at the prior auction.
This is the 4th time that the Treasury Bills Auction is undersubscribed as low liquidity hits the money market ahead of the Christmas and New Year Holidays.
According to a note from Sterling Capital, the Treasury bills are expected to remain undersubscribed in the medium term as investors eye the bonds market for higher returns.
Investors have been moving their cash towards the long-term debt securities over the bonds’ positive returns while they hold increased uncertainty for the near future.
Increased involvement by investors in the primary bond market also contributed to the under subscriptions.
Liquidity in the market has been consistently falling in recent weeks due to an aggressive mop-up by CBK.
But despite the undersubscription in the T-bill auction, Sterling Capital said demand for government securities remain high due to their positive returns and minimal risk.
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