Last week’s Treasury Bills auction at the Central Bank of Kenya (CBK) was oversubscribed amid high liquidity in the market, helping to push rates further down.
Investors bid Sh43.62 billion on the 91, 182-day and 364-day papers, against a target of Sh24 billion, representing a performance rate of 181.8 percent.
The government accepted Sh18.5 billion while maturities amounted to Sh20.87 billion, meaning there was net repayment of short term debt in the week.
The oversubscription followed a week of easing liquidity due to government payments.
The average interbank rate was recorded at 4.04 percent on Friday from 4.87 percent a week earlier.
Investors have continued to seek opportunities in the short-term government securities despite the low appetite for such funds from the government, with previous auctions recording oversubscriptions.
Interest rates dropped by 3.3 basis points and 8.7 basis points in the week’s auction to 7.104 percent and 7.731 percent for the 91-day and 182-day papers respectively, with the one year, offer to register the largest drop by 32.5 basis points to 8.648 percent.
The government has gone slow on borrowing ahead of the end of the current fiscal year, which has provided it with room to reject expensive bids and thus push interest rates downwards.
It also plans to intend to gradually reduce its debt stock held as Treasury bills to cut on refinancing risks.
Domestic government debt in form of Treasury bills has dropped to 20.7 percent of total borrowing, compared to 77 percent for bonds.
This is meant to cut refinancing risk for domestic debt, which would go up where the country has a large amount of debt maturing in the short term, thus putting pressure on revenue and making it more expensive to refinance maturing obligations.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
