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T-bill interest rates flat in auction as bids hit Sh32bn
Investor preference remains skewed towards the 91-day T-bill, indicating that investors are not keen on long commitments in case rates go up again in light of the government’s tough fiscal position.
Treasury bill interest rates flattened in the latest auction, offering the strongest signal yet that the recent rates decline has bottomed out.
The rate on the 182-day T-bill remained unchanged for a sixth straight week at 10.02 percent, while that of the 364-day paper edged down marginally from 11.30 percent to 11.29 percent. The 91-day T-bill, meanwhile, saw its rate go down from 9.56 percent to 9.52 percent.
The limited movement in the rates is a far cry from the weekly declines of up to 0.8 percentage points that were being recorded between October and December—when the T-bills saw their rates go down by between 5.1 and 6.6 percentage points.
In the latest auction, investors offered Sh32.8 billion, which the Central Bank of Kenya took up in its entirety, matching the rates demanded by the buyers, indicating convergence of rate expectations between the two parties.
The oversubscription was partly helped by maturities of Sh24.7 billion during the week, which fed into new bids.
“While the combination of elevated interest rates in the US and sizable domestic debt due for redemption into June could provide reason for local interest rates expectations to change, the market is yet to see a substantive indication of angst from the government,” said analysts at NCBA in a fixed income report.
“Moreover, the sovereign- through the draft 2025 Budget Policy Statement appears fairly calm on the public finance management front despite underwhelming tax revenue growth and external financing gaps… This could, therefore, yield a ‘wait and see’ sentiment by investors.”
Investor preference, however, remains skewed towards the 91-day T-bill, indicating that investors are not keen on long commitments in case rates go up again in light of the government’s tough fiscal position.
In last week’s sale, the offers (and acceptances) on the 91-day paper stood at Sh16.8 billion, beating the 364-day T-bill’s Sh12.2 billion, and Sh3.8 billion for the 182-day tenor.
