Money market investors gave the government’s short-term
securities a wide berth in the week ended Friday, 17, undersubscribing to
T-bills in favour of high-yielding, flexible alternatives.
Data from a weekly bulletin by the Central Bank of Kenya
shows that the Treasury bill auction of April 16 received bids worth Sh14
billion against an advertised amount of Sh24.0 billion, representing a
performance of 58.3 per cent.
This is despite the yields on the 91-day, 364-day and
182-day papers increasing by 2.4 bps, 0.2 bps and 0.02 bps to remain relatively
unchanged from the 7.4, 8.3 and 7.8 per cent.
Investors’ preference for the shorter 91-day paper waned,
with the paper receiving bids worth Sh2.6 billion against the offered Sh4
billion, translating to a subscription rate of 64.4 per cent, significantly
lower than the 199.4 per cent recorded the previous week.
The subscription rate for the 182-day paper decreased to
76.7 per cent from 108.5 per cent recorded the previous week, while that of the
364-day paper decreased to 37.5 per cent from 57.2 per cent recorded the
previous week.
The government accepted Sh13.97 billion worth of bids out of
Sh14.0 billion bids received, translating to an acceptance rate of 99.8 per
cent.
Investment experts are attributing this trend to the lower
base lending rate that continues to drive down overall lending rates.
They argue that when the CBK lowers rates, Treasury bill
(T-bill) yields typically decline as falling rates drive up their value,
benefiting holders.
“Money Market Funds (MMFs) tend to react even more quickly.
Since they invest in short-term instruments like repos, T-bills and agency
securities. Their yields drop as
existing holdings mature and are reinvested at lower rates,’’ Gregory Mugendi,
a money markets analyst, told the Star.
Currently, he says, the capital market, especially the stock
securities, is the most preferred investment vehicle, boosted by the launch of
Safaricom’s Ziidi trading platform.
During the week, the Nairobi Securities Exchange continued
with a bullish trend, with the NASI, NSE 25, and NSE 20 share price indices
increasing by 0.85 per cent, 0.89 per cent and 1.11 per cent, respectively.
Market capitalisation, total shares traded and equity
turnover also increased by 0.85 per cent, 59.36 per cent and 28.45 per cent,
respectively.
Bond turnover in the domestic secondary market increased by
48.34 per cent to close the week at Sh52.9 billion compared to Sh37.5 billion
the previous week.
The Kenya Shilling remained stable against major
international and regional currencies, while the foreign exchange reserves
remained adequate at $13.3 billion (Sh1.72 trillion) or 5.6 months of import
cover.
This is sustained by rising diaspora remittances.
According to CBK, remittance inflows to Kenya totaled $450.3
million (Sh55.4 billion) in March 2026 from $412.7 million (Sh53.4 billion) in
February 2026, an increase of 9.1 per cent.
The 12-month cumulative inflows to March 2026 increased by
2.2 per cent to $5.1 billion (Sh659.4 billion) from $4.97 billion (Sh642.6
billion) in a similar period in 2025.
“Remittance inflows remain a key source of foreign exchange
earnings and continue to support the balance of payments,’’ CBK said.
