Investor
appetite for the 364-day Treasury bill surged for the second week running, with
the tenor recording successive oversubscriptions since the reopening of the
30-year infrastructure bond in early September.
This saw last week’s auction receive bids totaling Sh38.8 billion against an advertised amount of Sh24 billion, representing a performance of 161.5 per cent.
Data from the weekly bulletin by the Central Bank of Kenya (CBK) shows that the 364-day paper attracted Sh23.1 billion in bids against an offer of Sh10 billion, representing a performance rate of 231 per cent.
The banking regulator accepted Sh19.08 billion, with a weighted average rate of 9.6 per cent, slightly up by 0.99 basis points from the previous week.
The strong interest in the 364-day bill comes amid a declining rate environment, following the CBK Monetary Policy Committee’s decision to cut the Central Bank Rate (CBR) to 9.5 per cent.
Investors are moving quickly to lock in yields that are now approaching parity with the CBR, anticipating further easing that may compress returns on short-term debt.
During the week, August’s diaspora remittance data was released, indicating that Kenyans working and living abroad sent home $426.2 million, a 0.2 per cent drop compared to $427.2 million in the same period last year.
Although the apex bank did not give reasons for the drop, experts link it to the rising high cost of living, especially in the US, which accounts for over 53 per cent of diaspora remittances.
According to CBK, inflation concerns remained during the week as U.S. inflation rose in August, with headline CPI at 2.9 percent year-on-year from 2.7 per cent in July, while core inflation held steady at 3.1 per cent. The increase was driven mainly by higher shelter and food costs.
The 12-month cumulative inflows to August 2025 increased by 9.4 per cent to $5.1 billion, compared to $4.6 billion in a similar period in 2024.
Remittance inflows remain a key source of foreign exchange earnings and continue to support the balance of payments, with foreign exchange reserves remaining adequate at $11.2 billion (4.9 months of import cover) as of September 11.
This meets the CBK’s statutory requirement to endeavour to maintain at least four months of import cover.
At the Nairobi Securities Exchange, the NASI, NSE 25 and NSE 20 share price indices increased by 0.4 per cent, 2 per cent and 1.9 per cent, respectively.
Market capitalization also increased by 0.4 per cent, while total shares traded and Equity turnover decreased by 15.8 per cent and 30.8 per cent, respectively.
Bond turnover in the domestic secondary market decreased by 21 per cent during the week to Sh39.7 billion, down from Sh50.2 billion the previous week.
In the international market, yields on Kenya’s Eurobonds decreased by 60.6 basis points on average.
