Investors placed bids worth Sh68.50 billion for government Treasury bills in the latest Central Bank of Kenya (CBK) auction, more than double the Sh28 billion initially offered, signalling strong demand for short-term government securities.
Three-month bill leads as interest rates ease
Results released on October 15 showed that the 91-day Treasury bill attracted the strongest interest, drawing Sh49.80 billion in bids against an advertised target of Sh8 billion.
The subscription level reached 622.46 per cent, reflecting demand more than six times the amount available.
CBK accepted Sh34.24 billion from the 91-day auction, comprising Sh26.44 billion in competitive bids and Sh7.80 billion in non-competitive bids.
The accepted bids carried a weighted average interest rate of 8.75 per cent, marginally lower than the 8.7615 per cent recorded in the preceding auction.
The results highlight a strong preference for shorter-dated instruments among investors seeking government-backed investment opportunities, with demand declining across longer maturities.
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Six-month paper records moderate demand
The 182-day Treasury bill attracted bids worth Sh12.06 billion against an offer of Sh10 billion, translating to a subscription rate of 120.58 per cent.
CBK accepted Sh11.48 billion, split almost equally between competitive bids worth Sh5.75 billion and non-competitive bids amounting to Sh5.73 billion.
The weighted average interest rate for the six-month security eased to 8.86 per cent from 8.8744 per cent in the previous auction.
One-year bill falls short of target
In contrast, the 364-day Treasury bill was the only instrument to attract bids below its advertised target, highlighting the uneven appetite for government securities across different investment periods.
The one-year bill received bids worth Sh6.64 billion against an offer of Sh10 billion, representing a subscription rate of 66.43 per cent.
CBK accepted Sh6.59 billion, with the successful bids attracting a weighted average interest rate of 9.0383 per cent, slightly above the previous auction’s 9.0352 per cent.
Total bids more than double the amount offered
Across all three securities, the central bank accepted Sh52.32 billion from the Sh68.50 billion submitted by investors. The accepted amount comprised Sh34.20 billion in competitive bids and Sh18.12 billion in non-competitive bids.
The total accepted bids exceeded the initial auction target by Sh24.32 billion, although the amount ultimately realised will depend on the National Treasury’s immediate cash requirements for the week, according to CBK.
Treasury bills are short-term government debt instruments issued through the central bank to raise funds for the government.
Investors purchase them at a discount to their face value and receive the full face value upon maturity, earning the difference as their return.
The securities are offered in different maturities, allowing investors to choose between shorter and longer investment periods depending on their liquidity needs and return expectations.
In a Treasury bill auction, competitive bidders specify the interest rate they are willing to accept, while non-competitive investors receive the average rate determined by CBK from the accepted bids, subject to applicable limits.
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