Investors injected Sh33.3 billion into Treasury bills in this week’s auction after sidestepping the Sh30 billion bond whose sale closed on Tuesday.
The high appetite for the short-term papers was in line with analyst expectations, continuing a trend where investors have preferred to park cash in short-duration securities as they wait out the interest rate uncertainty that has gripped the market.
The 91-day T-bill dominated bids this week, raising Sh30.5 billion against a target of Sh4 billion, while the 182-day and 364-day issues raised Sh2.7 billion between them.
Rates on the T-bills also continued to edge upwards, with the return on the 364-day Treasury bill crossing the 11 percent mark as the other two traded at 10.1 and 10.4 percent.
On Thursday, the Central Bank of Kenya (CBK) mobilised just Sh1.8 billion against a targeted Sh30 billion from a reopened three-year bond with 2.1 years to maturity.
At the same time, the apex bank disclosed the cancellation of a reopened 15-year bond after pressure from investors for higher returns in what marked a rare bond cancellation in the domestic market.
Analysts said despite the market seeing tight liquidity, the likeliest reason for the bond cancellation was aggressive investor bids, which were viewed to be untenable by the government, rather than a lack of interest to lend by investors.
Earlier in the month, the Treasury had auctioned the first tranche of this month’s bond issuance — a 10-year reopened paper targeting Sh20 billion — raising just Sh3.6 billion.
The poor performance could see the Treasury pile pressure on the Kenya Revenue Authority to beat collection targets or higher leverage on external financing to close the budget funding gap.
Apathy around bond issuances has left the government behind its domestic borrowing curve with only Sh396.3 billion having been mobilised by the end of March against a target of Sh886.5 billion which includes rollovers.
