T-Bills under-subscribed at Ksh 9.88 Bn against Ksh 24Bn target

The Central Bank of Kenya’s Thursday Treasury Bills auction resulted into under subscriptions due to the earlier primary bond auction.

The overall subscription rate coming in at 41.2 percent, compared to 91.8 percent recorded the previous week due to reduced liquidity in the money market, as investors attention shifted towards the primary bond auction market where two government bonds issues were on offer this week.

The bank raised Ksh 9.88Bn against an offered Ksh 24Bn.

“Secondary market executions centred on medium-term papers in Thursday’s session, accounting for 58 percent of market turnover which hit Ksh 862Mn. The session was salient with price discovery for the two new issues, although this occurred conservatively with the threat of a looming TAP sale next week,” noted Genghis Capital.

The yield on 91-day, 182-day and 364-day came in at 8.129 percent, 10.317 percent and 10.959 percent, respectively.

The Central Bank on 91-day, 182-day and 364-day  received  Ksh 2.58  Billion, Ksh 2.497 billion and Ksh 3.77  Billion respectively.

Despite this, the government is behind its domestic borrowing target for the current fiscal year, having borrowed Kshs 32.7 bn, against a target of Kshs 73.3 bn (assuming a pro-rated borrowing target throughout the financial year of Kshs 317.7 bn budgeted for the full financial year).

Last week, the Treasury bill auctions were under subscribed due to reduced liquidity, which was a result of tax remittances.
The National Treasury raised Ksh 26 billion on Wednesday from its two September bonds for budgetary support against a target of Ksh 30 billion.

The government had issued new 2-year bond (FXD 1/2017/2) and re-opened a 10-year bond (FXD 1/2017/10), with effective tenors of 2.0 years and 9.9 years, respectively whose bidding closed on Tuesday.