The Central Bank of Kenya (CBK) has reported remarkable investor interest in its Weekly Treasury Bills Auction held on Thursday, August 17, 2023. The auction saw bids totaling KSh 44.7 billion, marking an impressive oversubscription rate of 186%.
Of particular note was the exceptional attraction of the 91-day Treasury Bills, which garnered bids amounting to KSh 38.2 billion, outshining the KSh 4 billion on offer by an astonishing oversubscription rate of 955.74%. Ultimately, the CBK accepted KSh 37.1 billion in bids for this short-term instrument. The offered interest rate of 13.5% for the three-month bills marked an increase from the previous auction’s 13.1%, as the CBK strives to enhance the appeal of its debt instruments by offering higher returns.
As the equities market grapples with subdued returns, following the depreciation of the Kenyan Shilling against the US Dollar, investors are pivoting towards the more lucrative fixed-income treasury bills and bonds market.
Conversely, the long-term one-year Treasury Bills were the least favored instrument at this week’s auction, attracting bids totaling KSh 2.6 billion out of the KSh 20 billion available. Notably, the CBK opted to accept the entirety of the bids for this term.
In tandem with the T-bills auction, the CBK also conducted the sale of new 2-year and reopened 5-year Treasury Bonds. A total of KSh 40 billion worth of bonds were floated, and investor interest remained robust, resulting in bids worth KSh 53 billion – an oversubscription rate of 132.5%. Despite this strong demand, the CBK opted to reject a significant portion of the bids, maintaining its strategic stance.
Investors looking for higher yields were drawn to the CBK’s offering of 16.9% coupon rates for both the two-year and five-year Treasury Bonds, contributing to their attractiveness in the current investment landscape.
With these developments, the CBK’s recent auctions signal a clear shift in investment preferences, as investors seek stable and lucrative opportunities in the face of market volatility and currency challenges. As economic dynamics continue to evolve, these choices reflect a broader effort by investors to optimize returns while mitigating risks.
Photo Credit: Google
19th August 2023
Delino Gayweh
Serrari Financial Analyst
