The Central Bank of Kenya had issued treasury bills amounting to 24 billion shillings. Investors made bids of 4.03 billion shillings for 91-Day Treasury bills, 9.95 billion shillings for 182-Days, and 9.90 billion for 364-Days treasury bills.
The government raised 23.87 billion shillings from the treasury bills issued by CBK. The performance of the Treasury bill auction was 99.48 percent.
Out of the Total amount accepted by CBK, Treasury bills totaling 21.90 billion shillings were competitive bids and 1.97 billion shillings were noncompetitive bids.
Non-competitive bids are subject to a maximum of 20 million shillings per investor account per tenor and are issued at the weighted average of accepted bids. This does not apply to State Corporations, public universities, and semi-autonomous government agencies (SAGAs).
Investors who have bought treasury bills on offer for 91 days will earn an interest of 6.774 percent, treasury bills on offer for 182 Days will earn an interest of 7.224% and Treasury bills on offer for 364 Days will earn interest of 7.517 percent upon maturity.
Comparing to results for the previous auction the interest rates earned on treasury bills have gone up meaning better returns for investors. The minimum amount an individual can bid for treasury bills is a face value of 100,000 shillings.
Computations of Weighted Interest Rate earned on Treasury Bills bought
When an investor bids for 91 Day treasury bills with a face value of 100,000 shillings he will pay 98,339. Upon maturity of the 91 Day, he will get the principal value he paid plus interest.
When an investor bids for 182 Day Treasury Bids with a face value of 100,000 shillings, he/she will pay 96,522. Upon maturity, he will get the principal value he paid plus interest.
In total, an individual will get 100,000 shillings. When an investor bids for 364 Day Treasury Bids with a face value of Ksh 100,000, he/she will pay 93,026. Upon maturity, he will receive the principal value plus interest earned. In total, he will get 100,000.
The next auction date for treasury bills will be on 9th September 2021.
“Bids must be submitted and received by CBK either manually (application forms delivered in Treasury Bill tender boxes in any Branch or Currency Centre of Central Bank of Kenya) or electronically (via Treasury Mobile Direct or CBK Internet Banking for commercial banks) by 2.00 p.m. on Thursday, 9th September 2021 for 91-day, 182-day and 364-day Treasury Bills. Payments above Kshs.1 Million must be made by electronic transfer using RTGS. Payments below Kshs. 1 Million may be made by Cash, Banker’s Cheque, or RTGS. These payments must reach the Central Bank not later than 2.00 p.m on Monday, 13th September 2021. Please provide the following details with each payment: Name, Reference No. , CDS/ Portfolio Account No.,Issue No. and the Virtual Account No.” David Luusa, CBK Director for Financial Markets.
Individuals and companies can invest in treasury bills directly through Central Bank to avoid additional fees or commercial bank. For one to be eligible to buy treasury bills you need to open a CDS account with the Central Bank of Kenya or buy through commercial banks but you must have an account with them.
The government through the Central Bank Of Kenya issues Treasury bills to meet the liquidity requirements of the National Treasury. Many people prefer investing in Government stocks because they are low-risk investments and very safe.
By Frank Waruhiu