The uptake of the one-year Treasury bills has shot up even as the Central Bank of Kenya (CBK) marginally cut the interest rate.
The 364-day paper was oversubscribed almost four times with the CBK receiving bids worth Sh39.77 billion in the latest issue against an advertised Sh10 billion. The CBK took Sh36.8 billion of the amount.
The performance was in variance with bids received for the 91- and 182-day bills worth Sh629 million and Sh2.399 billion respectively, against the advertised Sh4 billion and Sh10 billion respectively.
The yields on the short-term government securities declined marginally to 8.147 percent and 9.828 percent compared to the last auction for the 182- and 364-day tenor bills respectively.
The 91-day interest rates remained flat at 7.2 percent.
The CBK accepted bids worth Sh39.67 billion against the total advertised Sh24 billion.
“The market is pricing in that the government is under pressure to meet its domestic target and is placing its bets on the longer-dated T-bills, which currently is offering attractive yields,” Churchill Ogutu, researcher at Genghis Capital Ltd said.
The current receipts on domestic borrowing are at Sh168.6 billion as at last October 31, below target of Sh429.4 billion in the current financial year.
According to Mr Ogutu, there is a ‘free lunch’ opportunity of rolling over maturities into higher yields as signalled by fiscal indicators.