Treasury bill subscription picked up last week as markets normalised after the elections, also indicating liquidity in the money markets has loosened.
Investors offered the government a total of Sh34.8bn in the three tenors of Treasury bill — against a target of Sh24bn — of which the Central Bank of Kenya (CBK) accepted Sh33.8bn.
During the election week (ending August 11) investors had bid Sh18.59bn, adopting a cautious approach to the market which was also fairly tight in liquidity.
“This week’s subscription on the Treasury bills shows the liquidity environment may have loosened… there was however flat movement in T-Bill yields,” said Genghis Capital in a market brief. “The overnight rate fell to 6.59 per cent on Thursday and the regulator is expected in the market to mop up during the course of the day with the local unit remaining relatively stable.”
CBK data shows that the 182-day paper attracted the highest bidding at Sh18.9bn against a target of Sh10bn. The Sh10bn 364-day paper was also oversubscribed with bids worth Sh12bn, while the 91-day T-bill was once again undersubscribed with bids worth Sh3.8bn having targeted Sh4 billion.
On the rates, the 91-day was slightly lower at 8.15pc from the previous 8.19, while the 182-day and 364-day were flat at 10.32 and 10.91pc respectively.
On Tuesday, the Treasury will be concluding the sale of this month’s Sh30bn 5-year and 10-year Treasury bond, which could shift attention away from the Treasury bill space in the primary market.
Kingdom Securities senior analyst Mercyline Gatebi says in the firm’s note on the bond that investors are likely to bid above 12.5pc for the five-year and 12.9pc for the 10-year paper.
This month, CBK faces maturities worth Sh110 billion on government securities, which could put some pressure on the regulator to accept a higher number of bids.
Credit: Business Daily