The National Treasury accepted bids worth Sh17.25 billion during last week’s auction for the three-month, six-month and one-year government debt securities - against a target of Sh24 billion.
The Thursday auction proceeds were was nearly double the amount Central Bank accepted for T-bills offered the previous week at Sh8.92 billion. T-bills are short-term instruments the government uses to raise cash to offset deficit in the budget.
The Central Bank received bids worth bids worth Sh18.22 billion during this last week’s auction. According to analysts at Cytonn Investments the undersubscription was attributed to tight liquidity in the interbank market, which saw average interbank rates increasing to 5.9 per cent from 4.7 per cent, the previous week.
Investors flocked for the 91-day T-bill which was oversubscribed by 269.8 per cent to rake in Sh10.79 billion of the Sh4 billion offered under the debt facility. The three month facility is currently trading at 7.3 per cent.
Bids accepted for the 182 and 364-day T-bills failed to meet the target with CBK collecting Sh4.34 billion and Sh2.61 billion of the Sh10 billion offered under both facilities.
CBK data shows Interest rates on all the three Treasury bill instruments at the auction declined marginally.
“We expect this to continue in the short-term, given the discipline of the CBK in stabilising interest rates in the auction market by rejecting aggressive bids that are priced above market, for both T-bills and T-bonds,” Cytonn said in its weekly report.