T-BILLS

Treasury bills indicate unease as bids rise by Sh1.2 billion in a week

The bids were only Sh1.2 billion worth more compared previous week auction

In Summary

Central Bank data showed bids to the 91-day, 182-day and 364-days Treasury bills were Sh27.2 billion worth compared to Sh26.0 billion received against advertised Sh24 billion in the week ending July 18.

Domestic investors including East African institutions, commercial banks and individual investors still show a reserved position as CBK governor Patrick Njoroge said there is no need to worry on market’s concerns after Rotich Arrest on graft charges.

The national treasury./File
The national treasury./File

National Treasury received bids worth Sh27.2 billion in the week ending July 25, indicating continued unease in the market and a skeptical stand by investors with former National Treasury cabinet secretary Henry Rotich's arrest.

Central Bank data showed bids to the 91-day, 182-day and 364-days Treasury bills were Sh1.2 billion worth more compared to Sh26.0 billion received against advertised Sh24 billion in the week ending July 18.

Treasury accepted bids worth Sh24.27 billion in the week.

The exchequer also reported increased interest rates on the short-term investments in the tenure, to make a 113.5 per cent a performance, compared 108.4 per cent in the previous week.

The interest rate on yields were 6.59 per cent and 8.99 per cent for the 91-day and one-year bills.

This compared to 6.49 per cent and 8.79 per cent in previous week.

The 182-day bills were offered at 7.37 per cent during the week

The marginal increase could indicate the pull for bidders after rates being on a decline trajectory for a long time as the government try to avoid expensive debt.

The week's bids however mark a huge lose compared to other auctions where the Treasury received Sh44.13 billion, Sh31.9 billion and Sh59.82 billion in weeks ending July 10, 3 and June 27 respectively.

However, domestic investors including East African institutions, commercial banks and individual investors still show a reserved position as CBK governor Patrick Njoroge said there is no need to worry on market’s concerns after Rotich Arrest on graft charges.

Rotich was arrested on July 22 together with his Principal Secretary Kamau Thugge.

They have been charged in connection with Sh46 billion contracts awarded to an Italian company, CMC di Ravena, for construction of the Kimwarer and Arror dam projects in Elgeyo Marakwet County.

President Uhuru Kenya has since appointed Labour Minister Ukur Yatani as acting finance minister on July 24.

During the week, the shilling also depreciated to 104.05 per dollar, its lowest level in almost two years.

Njoroge attributed the shilling’s weakness to excess liquidity in the money markets and increased hard currency demand from private companies.

Other markets also face a slow activity including the secondary equity markets.

Capital Markets Authority statistical bulletin for three months to June showed equity turnover was Sh32.89 billion compared to Sh45.25 billion between January to March, representing a 27.31 per cent decrease.

Similarly, market capitalization recorded a 3.46 per cent decrease to Sh2.28 trillion from Sh2.36 trillion over the period.

Traded volumes followed the same trend, falling by 3.46 per cent to 1.39 billion compared to 1.08 million.

On the other hand, the secondary bonds market resurged during the period as turnover increased by 24.8 per cent to Sh201.71 billion compared to Sh161.61 billion traded in the previous quarter.

“This an indicative of the shift by investors from the equities market to the bond market as they sought to maximize on their portfolio returns,” CMA said.

“The 15-year Treasury bond floated during the July 24 auction received bids totaling Sh86.7 billion against an advertised amount of Sh40 billion, representing a performance of 216.7 per cent,” CBK said in the July 26 weekly bulletin.