Analysts said in the last five auctions, as CBK sought to contain upward pressure on yields, investor appetite for the two short-term tenors has diminished.
Short-term government papers saw a relatively sluggish uptake at the first weekly Treasury bill auction of the new fiscal year, with the overall performance rate at 146.03 per cent.
The sale raised Sh35.04 billion but the Central Bank of Kenya (CBK) only accepted Sh24.81 billion.
The apex bank accepted an average 84.34 per cent and 66.69 per cent on the 91-day and 182-day tenors, respectively, while the one-year note was oversubscribed.
Analysts said in the last five auctions, as CBK sought to contain upward pressure on yields, investor appetite for the two short-term tenors has diminished.
“The CBK has managed well to contain the rates on the shorter end of the yield curve (and implicitly, on the rest of the curve) which is a prudent move as Treasury ups its 2018/19 financial year borrowing gear,” said analysts at Genghis Capital in an email response on Friday.
“We also view the rate cap repeal as proposed in the Finance Bill 2018, awaiting parliament approval, will determine the yield movement in the near-term,” the analysts said.
The 91-day tenor received bids worth Sh749.02 million against and offer of Sh4 billion or 18.73 per cent performance while the 182-day tenor received bids worth Sh7.7 billion against an offer of Sh10 billion. This was a 77.09 per cent performance rate. The 364-day tenor attracted most investors receiving bids worth Sh26.58 billion against an offer of Sh10 billion, a 265.89 per cent performance rate.
CBK data showed that yields for the three tenors came in at 7.725 per cent (91-day), 9.499 per cent (182-day), and 10.442 per cent (364-day).
During the week, market players were mapping out their strategies for the quarter.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
