Capital Markets

Treasury bills subscription off target as focus shifts to bonds

 The 182-day paper attracted Sh3.5 billion against a target of Sh10 billion with the government taking in Sh2.4 billion. FILE PHOTO | NMG
The 182-day paper attracted Sh3.5 billion against a target of Sh10 billion with the government taking in Sh2.4 billion. FILE PHOTO | NMG 

Treasury bills subscription fell further below target for the second week in a row as investors’ appetite shifted to the bonds market.

Last week’s auction fell short of the Sh24 billion target by Sh14.1 billion.

The Treasury accepted Sh8.8 billion from the Sh9.8 billion worth of bids received.

The overall subscription rate came in at 41.18 per cent, compared to 91.8 per cent recorded the previous week.

The fall in subscription dropped further compared to the previous week when investors had offered a total of Sh22 billion.

The subscription rates for the 91-, 182- and 364-days papers came in at 64.5 per cent, 35.2 per cent and 37.7 per cent, compared to 103 per cent, 95.5 per cent and 83.5 per cent respectively, the previous week.

“The 91-days paper attracted bids worth Sh2.5 billion out of the target Sh4 billion with Treasury accepting all the bids.

The 182-day paper attracted Sh3.5 billion against a target of Sh10 billion with the government taking in Sh2.4 billion.

The 364-day paper received Sh3.7 billion worth of bids out of Sh10 billion on offer which the Treasury absorbed,” Central Bank of Kenya (CBK) data showed.

However, market weighted average interest rate was flat at 8.1 per cent for the three-month paper, 10.3 per cent for the six-month paper and 10.9 per cent for the one year tenor paper.

Market analysts are expecting the government to meet its domestic borrowing target, as banks and institutions channel funds more actively towards government securities following the enactment of the law capping interest rates.