Treasury bills were undersubscribed for the first time in two weeks as rates continued downwards after progressive interest rate cuts by the Central Bank of Kenya (CBK).
- This week, the government raised KSh 18.9 billion against a targeted KSh 24 billion – a 78.6% under subscription, lower than the 138.1% oversubscription registered a week earlier.
- Only the 364-day paper was oversubscribed owing to the slightly higher returns offered on the paper compared to the other shorter term papers.
- The CBK however accepted 96.1% of the total bids received amounting to KSh 18.1 billion, rejecting expensive bids.
Demand was skewed towards the 364-day paper, attracting bids worth KSh 10.03 billion translating to a 100.3% subscription rate. The 91-day paper received bids worth KSh 3.4 billion from the targeted KSh 4 billion with the182-day paper attracting bids worth KSh 5.4 billion – a 54.5% under subscription.
Yields on all the tenors edged lower, trailing below the 12% mark following the 175 basis points rate cut in 2024. The average accepted yield on the 91-day, 182-day and 364-day papers declined by 0.03%, 0.005% and 0.03% respectively compared to last week’s auction to 9.5647%, 10.0299% and 11.3044%.
The aggressive tightening by the CBK in 2023 spilling over to 2024 buoyed the higher yields that clocked 18% in February – popularizing the short-term government debt.
The CBK’s monetary policy committee is expected to meet on 5th February 2025, with markets banking on either another rate cut or no change amid easing inflation and a stable currency.
