Market News

Tight market liquidity cuts uptake of Treasury bills at the weekly auction

Central Bank head office in Nairobi. FILE PHOTO | NMG
Central Bank head office in Nairobi. FILE PHOTO | NMG 

Treasury bills subscription rate dropped to 72.6 per cent last week from 106.1 per cent recorded the previous week amid tight liquidity.

The subdued performance of the treasuries indicated drying up of liquidity, also manifested in the uptrend in average weighted interbank rate, which touched 9.67 per cent in the week.

Analysts on Friday attributed liquidity situation to low government spending and corporate tax payments.

At the close of the auction, Central Bank of Kenya (CBK) received bids of Sh17.4 billion out of Sh24 billion target, accepting Sh17.3 billion.

All the issues were undersubscribed, with yields for 91-days and 182-days papers dropping marginally to 8.008 per cent from 8.015 per cent and 10.483 per cent from 10.488 per cent respectively.

The 364-days paper yield rose marginally to 11.004 per cent from 11 per cent.

“The shilling weakness has also stripped off the regulator ammunition of injecting liquidity in the market (via repos). As we approach year-end, we expect the shilling to gain ground as remittances continue rising and corporate greenback demand abate. We are thus expecting normalcy in the Treasury bills segment as soon as the CBK resumes its liquidity-injecting activities,” said Genghis Capital.

The 91-days paper attracted bids of Sh1.76 billion, which was absorbed by the Treasury, against a target of Sh4 billion. This represented a 44.2 per cent subscription rate.

The 182-days paper received bids worth Sh9.1 billion against a target of Sh10 billion, a 91.1 per cent performance rate. The Treasury accepted Sh9 billion from the bids.

The 364-days paper had bids worth Sh6.5 billion against a target of Sh10 billion.