Capital Markets

CBK leaves billions on the table after huge T-bill oversubscription


The Central Bank of Kenya. FILE PHOTO | NMG

The latest Treasury bill auction was oversubscribed by nearly Sh16 billion after the Central Bank of Kenya (CBK) offered only Sh24 billion worth.

Investors put in Sh40.2 billion but the CBK took up Sh32.34 billion, which was more than it had initially offered to the market for the auction. The oversubscription was driven by the 364-day paper that attracted huge demand.

The market is still flash with cash after the CBK recently rejected Sh63 billion after floating two- and 15-year bonds and only took up Sh38 billion.

The regulator was at an advantage and even gave rates for the three tenors — 91-, 182- and 364-day paper — lower than those of the previous week.

“The regulator just had an oversubscription on the bonds and so there was a lot of money left on the table. The bonds were paid for on Monday and so by the time of the T-bill auction on Wednesday, the money was available to investors to participate in the auction. That is why we saw the high subscription,” said a research analyst at an investment bank who is, however, not authorised to speak to the media.

The 364-day paper was the only one oversubscribed with the government accepting Sh21.9 billion of the Sh29.7 billion worth of bids received. Weighted average rate for the paper declined 4.9 basis points week on week to 9.856 per cent.

Both the 91- and 182-day paper were undersubscribed.

For the 91-day paper the government accepted all of the Sh2.4 billion worth of bids received. The weighted average rate of accepted bids decreased 6.1 basis points week-on-week to 7.061 per cent.

For the 182-day T-bill, Sh8.03 billion was accepted out of the Sh8.097 billion subscribed for and the Sh10 billion offered by the CBK. The rate for the accepted bids stood at 8.78 per cent, lower than the 8.83 per cent achieved in the previous week.