T-bills uptake stays low for fourth straight week despite high liquidity


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Capital markets

T-bill adoption remains low for fourth consecutive week despite high liquidity


Central Bank of Kenya. PHOTO FILE | NMG

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Summary

  • The treasury bill auction last week which targeted the usual made bids of 24 billion shillings worth just 13.1 billion shillings, all of which were taken over by the Central Bank of Kenya (CBK).
  • The amount was not sufficient to cover the 20.4 billion shillings due last week.

Demand for Treasuries remained lower at auction, which was underwritten for the fourth week in a row despite a liquid money market that saw this month’s bond supply attract bids worth $ 151 billion. shillings.

The treasury bill auction last week which targeted the usual made bids of 24 billion shillings worth just 13.1 billion shillings, all of which were taken over by the Central Bank of Kenya (CBK).

The amount was not enough to cover the 20.4 billion shillings due last week, meaning the government ended up repaying 7.3 billion shillings net on short-term bonds.

The rates on 91 and 364-day securities rose 8.9 and 6.8 basis points to 6.87% and 7.845% respectively, while the 182-day rate remained unchanged at 7.25 %.

Although the market has remained liquid over the past month, the adoption of Treasuries has been largely lukewarm, with investors eyeing the much higher rates offered by the bond market.

The CBK has also tightened its use of treasury bills by rejecting expensive offers.

As a result, the share of total securities in the form of Treasury bills fell to 20.06%, with 79.94 in bonds. Three years ago, Treasury bills represented 38.03% of total government securities outstanding.

The decrease in the share of debt in the form of treasury bills reduced the risk of refinancing domestic public debt.

The government avoids using treasury bills to finance the budget deficit, hence the position of taking just enough to cover maturities even in the event of oversubscription.

So far in the current fiscal year, the state has borrowed a net amount of 278 billion shillings from the domestic market, all from the bond market and well ahead of the target of a year when he plans to borrow 658.8 billion local shillings.

The prorated target amount for the first quarter of the fiscal year (three months to September) is 164.7 billion shillings.

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