Treasury Bills oversubscribed despite fall in yields,auction rates

The weekly Treasury Bills auction at the Central Bank of Kenya (CBK) was oversubscribed despite tightened liquidity in the market.

Investors on the Treasury Bills bid Sh38.88 billion on the 91, 182-days and one-year papers above the Sh24 billion target, representing a performance rate of 162 per cent.

The government took Sh22.37 billion, with maturities at Sh25.84 billion hence no new borrowing in the week.

The auction saw a decline in rate by an average of 4.1 basis points to 7.155 per cent, 7.953 per cent and 9.284 per cent on the government securities respectively.

Investors showed interest in the one-year paper bidding Sh24.13 billion due to its better yield despite a decline in the auctions rates.

“Yield on the 364-day continued its descent, with a 19 basis points drop since reversing its uptrend early this month. Overall, yields performance in the discounted securities have increased by 57bps from the start of the year and by 152 basis points from July 2020 lows,” Genghis Capital stated in their weekly asset note.

During the week, liquidity tightened with the average interbank rate recorded at 4.85 per cent from 4.04 per cent in the previous week.

“The money market was liquid during the week ending May 20, supported by government payments, which offset tax remittances. Commercial banks’ excess reserves stood at Sh19.1 billion in relation to the 4.25 per cent cash reserves requirement,” CBK stated in the weekly bulletin.

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