Kenya Treasury Bill Auctions Undersubscribed on Tight Liquidity

Kenya’s 2 and 15-year Treasury Bonds Raise Ksh 32bn

Kenyan T-bills were undersubscribed last week attributed to tight liquidity in the money markets.

Results released by Central Bank of Kenya (CBK) for the Treasury bill auctions show the subscription rate declining to 80.6%, from 98.3% recorded the previous week.

The relatively tight liquidity is attributable to the cyclical liquidity tightness due to the start of the new CRR cycle.

Yield on the 91-day and 364-day papers remained unchanged at 6.4% and 9.8%, respectively, while the yield on the 182-day paper fell by 0.1% points to 7.2%, from 7.3% recorded the previous week.

The acceptance rates decreased to 67.8%, from 71.7% recorded the previous week, with the government accepting Kshs 13.1 billion billion  out of the Kshs 19.3 billion worth of bids received.


The average interbank rate increased by 0.2% points to 7.2% from 7.0% recorded the previous week.

As a result of the tight liquidity, commercial banks’ excess reserves come in at Kshs 16.4 billion, compared to 11.5 billion recorded last week, in relation to the monthly 5.25% cash reserve requirement.

The average volumes traded in the interbank market increased by 13.0% to Kshs 6.0 billion, from Kshs 5.3 billion the previous week.

Cytonn Investments says with a possibility of repealing of the interest rate cap, they expect improved private sector credit growth in the country, especially access to credit by MSMEs.

“This will lead to increased competition for bank funds from both the private and public sectors, thereby reducing liquidity in the money market, resulting in upward pressure on interest rate.”

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