Treasury bill rate increases slightly

 

The Central Bank of Kenya. Photo/FILE 

By John Gachiri

In Summary

• Analysts said that they expect liquidity in the market to tighten as companies begin to file their annual returns to the Kenya Revenue Authority.

Rates on government paper increased slightly due to liquidity in the market tightening ahead of the tax return season.

The weighted average yield on the latest 182-day Treasury bill marginally increased to 10.347 per cent in the latest auction from 10.326 per cent in the previous auction.

Analysts said that they expect liquidity in the market to tighten as companies begin to file their annual returns to the Kenya Revenue Authority.

“We expect liquidity to tighten slightly on account of payment of taxes and thus exerting pressure on available liquidity.

‘‘As such we expect further upward pressures to be exerted on the interbank rate, which will see investors demand higher rates in T-Bill auctions,” said a market report by Genghis Capital.

The 364-day Treasury bill however saw its yield drop to 10.610 from 10.654.

Overall, the Central Bank of Kenya (CBK) saw an oversubscription in both the 182-day and 346-day Treasury bills.

In total CBK received bids worth Sh5.5 billion against the Sh6 billion it sought but ended up accepting Sh4.8 billion.

READ: Yield on 182-day Treasury bill edges up at auction

CBK will be out to raise Sh9 billion in the next auction.

Liquidity in the market is expected in coming weeks as the government is set to issue a sovereign bond meant to raise as much as $2 billion (Sh172 billion). The bond will be used to pay off a $600 million (Sh52 billion) debt and plug a Sh330 billion deficit.