Capital Markets

T-bills subscription falls short with eye on projects bond

cbk

The Central Bank of Kenya building in Nairobi. FILE PHOTO | NMG

Treasury bills uptake fell short in last week’s auction largely due to the tightening liquidity and the on-going Sh40 billion primary infrastructure bond sale.

The Treasury only managed to raise Sh16.28 billion against a target of Sh24 billion from the three government papers issued through the Central Bank of Kenya (CBK). This represented 79.90 per cent overall subscription rate.

In the previous week, Treasury bills had been oversubscribed, after eight weeks of under-subscription, with overall subscription rate coming to 124.4 per cent.

The good subscription had been driven by maturity of expensive short-term deposits taken by banks in December.

During last week’s auction yields for the 91-, 182-, and 364-day papers were at 8.004 per cent, 10.641 per cent and 11.149 per cent respectively.

“The subscription rates for the 91-, 182-, and 364-day papers came in at 42.37 per cent, 99.44 per cent and 75.37 per cent respectively,” CBK said. The 91-day paper secured Sh1.69 billion worth of bids against a target of Sh4 billion, all of which was absorbed by the Treasury.

READ: Kenya’s low risk debt window under threat, say economists

The 182-day paper attracted bids worth Sh9.94 billion from investors against a target of Sh10 billion, with the Treasury absorbing Sh7.24 billion.

The 364-day paper received bids worth Sh7.53 billion against a target of Sh10 billion and the Treasury accepted Sh7.34 billion from that offer.

During the week, CBK issued a 15-year infrastructure bond with a coupon of 12.50 per cent. A section of money markets analysts said the market took the news positively with initial appetite looking healthy but they remained sceptical if CBK can raise Sh40 billion.