The Central Bank of Kenya (CBK) Weekly Treasury Bills auction recorded a huge redemption of KSh 48.5bn out of KSh 51.1bn bids received and an amount of KSh 48.8 accepted at this auction.
- According to analysts, these high redemption levels by CBK are notable and have not been seen in this 2023/24 fiscal year since November 2023.
- A redemption means that if one invests money in a Treasury bill, investors will receive that money back within three months, six months, or one year, depending on the bill chosen.
- Investors make money on Treasury bills because they are sold at a discount.
T-bills are generally held until the maturity date. However, some holders may wish to cash out before maturity and realize the short-term interest gains by reselling the investment in the secondary market.
Investors also appear to be spreading their risks by showing more interest in the 6-month and one-year treasury bills, debt instruments that remained unattractive for the better part of 2023.
In this week’s T-bills auction, investors continue to show their preference for the short-term 91-day treasury bill. Bids received totalled KSh 34.7 billion out of KSh 4 billion offered, a performance rate of 867.62% oversubscription. The CBK accepted KSh 33.3 billion.
- The 182-day treasury bills attracted bids worth KSh 9.5 billion out of KSh 10 billion on offer, a performance rate of 94.5% with CBK accepting KSh 9.4 billion.
- The one-year treasury bills also received bills worth KSh 6.9 billion out of KSh 10 billion with CBK accepting KSh 6.1 billion, a performance rate of 69.68%.
- The CBK continues to offer higher returns to investors in the Government paper market as indicated by the interest rates that have now climbed to above 16.5% from around 15% weeks ago.
The next auction date and bids closure is 15th February 2024 where CBK will be seeking KSh 45.2 billion in redemptions.