Central Bank of Kenya (CBK). FILE PHOTO | NMG
Summary
- The Central Bank of Kenya(CBK) said that last week’s auction, which targeted Sh24 billion saw Sh17.31 billion bids across all three tenors, with the State taking up Sh16.53 billion as the regulator rejected expensive bids.
- Investors bid Sh19.52 billion in the previous week, a shift from the two auctions that had witnessed a growing demand due to improving liquidity.
- The short-term securities market had been affected by tightened liquidity and investor preference to long-term bonds which offer higher yields.
The Treasury bills auction was undersubscribed last week as investors took the wait-and-see approach in anticipation of short-term Treasury bonds.
The Central Bank of Kenya(CBK) said that last week’s auction, which targeted Sh24 billion saw Sh17.31 billion bids across all three tenors, with the State taking up Sh16.53 billion as the regulator rejected expensive bids.
Investors bid Sh19.52 billion in the previous week, a shift from the two auctions that had witnessed a growing demand due to improving liquidity.
The short-term securities market had been affected by tightened liquidity and investor preference to long-term bonds which offer higher yields.
CBK data show the interest rates for the 91-, 182-day and 364-days in the auction increased by an average of 0.076 percent to 6.653 percent, 7.038 percent and 7.933 percent respectively.
Analysts have said the turnaround drop in the uptake is attributed to a wait-and-see approach by many investors in anticipation of short-term Treasury bonds.
Despite the now improved liquidity, investors are holding back on investment in the short term papers, a move that has led to heavy bidding to the Treasury bonds.
“Most investors seems to have priced in the recent uptick on the T-bills segment to spill over to the rest of the shorter end of the yield curve,” Churchill Ogutu, head of research at Genghis Capital said.
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