The Central Bank of Kenya (CBK) accepted bids worth KSh 10.1 Billion out of the KSh 24 Billion in Treasury Bills offered during last week’s Auction. This is the 5th time that the Treasury Bills auction has been undersubscribed.
The Auction attracted bids worth KSh 12.7 Billion, an undersubscription of 52.8%, as investors rushed out for the Christmas and New Year festivities. This subdued performance at the weekly Treasury Bills Auction reflects a tightening of conditions.
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Tight money market
During the week ended 24th December 2020, tax remittances more than offset government payments. Commercial banks’ excess reserves stood at KSh 20.1 billion in relation to the 4.25% cash reserves requirement (CRR). Open market operations
remained active.
The average interbank rate was 5.92 % on December 24 compared to 5.75 % on December 17th, 2020. The average number of interbank deals per day declined to 27 from 41 in the previous week, while the average value traded declined to KSh 10.53 billion from KSh 14.8 billion in the previous week.
Most attractive Treasury Bill
The most popular instrument was the 91-day Treasury Bill, which attracted bids worth KSh 5.752 Billion from the KSh 4 Billion on offer, an oversubscription of 143.82%. The CBK accepted KSh 5.6 Billion on this tenor.
Out of the KSh 10 Billion in the 182-day TbIlls, the CBK accepted bids worth KSh 2.4 Billion from the KSh 2.5 Billion in bids received, representing an underperformance of 25.2%.
The CBK accepted bids worth KSh 2.1 Billion out of the KSh 10 Billion in the one year Treasury Bills offered against KSh 4.4 Billion that was received, a performance rate of 44%.
Next Treasury Bills Auction
The next Treasury Bills auctions and bids closure occur on 30th December, 2020, where the CBK will be offering KSh 24 Billion. It aims to raise KSh 25.5 Billion for redemptions and KSh 1.5 Billion for new borrowings/net repayments.
CBK Weekly bulletin
Data from the CBK Weekly bulletin, shows that Interest rates on all the Treasury bills tenors remained stable, only rising marginally.
The tap sale for the 15-year Treasury bonds of December 23rd, 2020 received bids totaling KSh 10.0 billion against an
advertised amount of KSh 22.0 billion, representing a performance of 45.5%
According to David Luusa, Director of Financial Markets at the CBK, the Auction for the 91-day, 182-day, and 364-day value date of 4th January 2021 will close at 2 pm on Wednesday, 30th December 2020.
This is in consideration of the New Year Holiday.
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