The Treasury rejected almost half the bids in March as it neared its yearly borrowing target amid low subscriptions last week.
Central Bank of Kenya (CBK) data shows the regulator received bids totalling Sh144.97 billion from investors in the past four weeks auctions but accepted just Sh76.78 billon.
The rollovers were Sh103.40 billion in the month’s auction.
This come as data indicated the Treasury had borrowed nearly Sh378.40 billion in net debt from domestic investors such as banks, fund managers and insurers, in the eight months of the 2019/2020 financial year.
This represented an equivalent of 96.67 percent of the Sh391.45 billion full-year target.
The Treasury offered lower rates for the 91-, 182- and 364-day paper bills at 7.204 percent, 8.118 percent and 9.045 percent respectively at the auction for the week ending March 26.
“CBK is signalling that it is ahead of the borrowing curve hence the rejection of the more aggressive bids. T-bill yields fell by an average of 0.32 percent across the tenors in the period,” Mr Churchill Ogutu, head of research at Genghis Capital said.
The lower subscription came despite improved liquidity. This followed an additional liquidity of Sh35.2 billion that was injected in banks from the reduction in the Cash Reserve Ratio by 1.0 percent on March 23 to the 4.25 percent.
Commercial banks’ excess reserves stood at Sh38.8 billion in relation to the cash ratio requirement.
“The Treasury bills auction of March 26 received bids totalling Sh13.7 billion against an advertised amount of Sh24 billion, representing a performance of 57.0 percent. Interest rates on the 91-day and 364-day Treasury bills decreased while that on the 182-day Treasury bill increased marginally,’’ central bank weekly bulletin stated.