T-bill auction fails to raise enough cash for Sh104bn maturities

The Central Bank of Kenya (CBK) failed to raise enough in Treasury bill auctions in April to match maturing short-term debt as uncertainty over the coronavirus haunted investors.

CBK data shows the regulator accepted a total Sh84.93 billion from investors in the past five T-bill auctions, against Sh104.27 billion maturities.

The CBK, the fiscal agent for the Treasury, normally raises new funds to pay off maturing bills from matching tenors.

At the auction, the government received Sh87.04 billion bids for all the tenors.

The subscription also follows a Sh21 billion nine-year tenor infrastructure bond issued last week, for which the government has turned to close the gaps on targeted borrowing this year.

The CBK received Sh37.84 billion bids and accepted Sh35.39 billion with a coupon of Sh10.85 percent on the bond.

“These [auctions] would indicate they borrowed less than they paid out in short-term instruments. However, there was also a bond which they issued which helped meet their borrowing targets and lengthen their maturity profile,” said Sarah Wanga, head of research at AIB Capital.

In the April 30 auction, the 91-day, 182-day and one-year papers attracted Sh17.90 billion bids, out of which the CBK accepted Sh15.66 billion.

Yields on all three tenors increased marginally by between 1.1 and three basis points to 7.212 percent for the 91-day, 8.12 1per cent for the 182-day and 9.110 percent for the 364-day paper.

In the previous week’s auction, investors sought higher interest on the one-year bills, bidding up to Sh10.750 billion above the target of Sh10 billion. This is compared to 91-day bill which was highly subscribed. In last week sale, it received bids worth Sh4.47 billion against Sh4 billion target.