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Capital Markets

T-bill sale oversubscribed in first auction of new year

Central Bank of Kenya
Central Bank of Kenya. FILE PHOTO | NMG 

The Treasury raised Sh43 billion in the first sale of government securities this fiscal year, taking advantage of a highly liquid market to collect an amount above target at lower interest rates.

The Central Bank of Kenya said that last week’s Treasury bills auction that sought Sh24 billion attracted investor bids worth Sh76.2 billion, out of which the regulator took up Sh43.9 billion.

All three tenors were oversubscribed, bucking a recent trend which has seen investors opting heavily for the one-year paper.

Rates all fell though as a result of the high demand.

On the 91-day T-bill, the yield went down to 6.55 percent from 6.7 percent in the previous auction.

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The 182-day paper saw its rate fall to 7.05 percent from 7.4 percent, while the 364-day paper returned 7.77 percent from 8.19 percent previously.

The high liquidity allows the government an early opportunity to front load on domestic borrowing for the fiscal year taking advantage of the prevailing low interest rates, which translates into lower financing costs down the road for the debt.

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