Improved liquidity in the Kenyan market due to government payments increased the uptake of Treasury Bills in last week’s auction with a 195.8% subscription rate compared to the previous one of 217.4%.
The National Treasury through the Central Bank of Kenya accepted Ksh 30.2 billion against Ksh 47.0 billion bid received. The acceptance rate rose to 64.2% from 53.6% recorded in the last auction.
The yield on the 91-day, 182-day, and 364-day papers remained unchanged at 7.3%, 8.3%, and 9.9% respectively.
The 364-day paper continued to receive the most interest from investors, having recorded the highest subscription rate of the 3 papers at 379%.
“This is attributable to the market currently pricing that the government will be under pressure to meet its domestic target and as such a bias to shorter-dated papers in order to avoid duration risk which has seen most investors still keen on the primary fixed income market, finding the 364-day T-bill more attractive on a risk-adjusted return basis,” comments from Cytonn Investment Analysts.
The Treasury released KSh151.4 billion to all the 47 county governments by February 14 as their equitable share of revenue raised nationally this financial year.
The government is 23.3% ahead of its domestic borrowing target having borrowed Ksh 244 billion against a pro-rated target of Ksh 196.4 billion.
According to Bloomberg, Kenya will continue relying on domestic borrowing to fund budget deficits in a new debt management strategy with a target of 72% of the total in the next three fiscal years compared to 62%.
This is according to its Medium-term debt management strategy presented to Parliament on Thursday.