In a notable development, the Central Bank of Kenya (CBK) recently conducted its Weekly Treasury Bills auction, witnessing a significant redemption of KSh 48.5 billion out of KSh 51.1 billion in bids received. The CBK accepted KSh 48.8 billion at this auction, marking a substantial movement in the market.
This surge in redemptions, according to analysts, is unprecedented in the 2023/24 fiscal year since November 2023. A redemption in Treasury bills implies that investors receive their invested amount back within a specified period of three months, six months, or one year, depending on the chosen bill. Investors profit from Treasury bills as they are initially sold at a discount and mature at face value.
Investors are increasingly diversifying their portfolios, displaying heightened interest in the 6-month and one-year treasury bills, which had previously been less attractive throughout 2023.
In this week’s T-bills auction, the short-term 91-day treasury bill saw overwhelming demand, with bids totaling KSh 34.7 billion against KSh 4 billion offered, resulting in an oversubscription rate of 867.62%. The CBK accepted KSh 33.3 billion in this category.
Similarly, the 182-day treasury bills received bids worth KSh 9.5 billion out of KSh 10 billion on offer, achieving a performance rate of 94.5%, with the CBK accepting KSh 9.4 billion. The one-year treasury bills attracted bids worth KSh 6.9 billion out of KSh 10 billion, with the CBK accepting KSh 6.1 billion, representing a performance rate of 69.68%.
The CBK is persistently offering higher returns to investors in the Government paper market, with interest rates climbing to over 16.5% from approximately 15% in previous weeks.
The next auction, scheduled for closure on February 15, 2024, will see the CBK seeking redemptions amounting to KSh 45.2 billion, further indicating the dynamic nature of Kenya’s financial markets.
By: Delino Gayweh
Serrari Financial Analyst
February 12, 2023
