Kenya Treasury Bills Auctions Records an Over Subscription

Treasury bills auctions have recorded an over-subscription at 164.1 percent compared to 56.2 percent recorded in the month of December 2019, reports Cytonn Investments.

The overall subscription for the 91 day came in at 86.2 percent which was higher than 65.4 percent recorded in December.

The subscription rates for the 182 day and 364 day came in at 50.0 percent and 230.5 percent higher than the 24.6 percent and 57.1 percent recorded in December respectively.

The yields on the 91-day, 182-day paper and 364- day paper recorded increases of 60bps, 50bps and 30 bps, respectively to close at 7.2, 8.2 and 9.8 percent respectively in January

“We note that there was pent up demand for the 364 day paper, having recorded the highest subscription rate of the 3 papers, at 230.5 percent,” said analysts from Cytonn Investments.

This is attributable to the market currently pricing that the government will be under pressure to meet its domestic borrowing target, and  as such a bias to shorter-dated papers to avoid duration risk, which has seen most investors still keen  on the primary fixed income market, finding the 364-day Treasury bill more attractive on a risk-adjusted return basis.

The Treasury bills acceptance rate came in at 84.2 percent during the month as compared to 79 .8 percent recorded in December with the government accepting a total of 132.6 billion shillings of the 157.5 billion shillings worth of bids received.

The Central Bank remained disciplined in rejecting expensive bids in order to ensure the stability of interest rates.

The oversubscription is partly attributable to favourable liquidity in the money market during the week due to government payments.

Treasury bills are a secure, short-term investment, offering you returns after a relatively short commitment of funds providing an excellent investment opportunity that is readily available, as they are auctioned each week in Kenya.