Investors shunned Kenya’s indicative 91-day Treasury bill this week as yield dropped marginally, pointing to the direction the debt market may take in coming weeks.

The short-term paper was undersubscribed for the first time in many weeks, attracting only half of the 39 million U.S. dollars the Central Bank sought, according to auction data released on Friday.

“This week the Central Bank of Kenya offered 91-day Treasury Bills for a total of 39 million dollars. The total number of bids received amounted to 21 million dollars representing a subscription of 54 percent,” said the apex bank, adding it accepted all the bids at 8.35 percent, down from 8.36 percent.

The 91-day T-bill is currently trading below its 5-year average yield of 10.4 percent.

Last week, the bank offered 91-day Treasury bills worth the same amount and received bids amounting to 56 million dollars representing a subscription of 142 percent. The bank accepted all the bids.

While overall subscription for all the short-term papers has dropped, the 182 and 364 days bills this week were not undersubscribed. Treasury offered bills worth a total of 118 million dollars as in the previous week.

“The total number of bids amounted to 73 million dollars, representing 122 percent subscription for the 182-day paper and 75 million dollars representing 126 percent subscription for 364 days paper.”

Bids accepted amounted to 71 million dollars for the 182 days bills at 10.5 percent yield and 50 million dollars for the 364 days paper at 11.1 percent.

Analysts at the Nairobi-based investment firm Cytonn noted that the levels of T-bill subscription have started declining, with the week’s overall subscription decreasing to 106 percent, compared to 114 percent previous week.

They blame the decline to low interest rate environment due to reduced pressure from the government borrowing program, given that it is ahead of its domestic borrowing target and increased liquidity in the market brought about by the capping of banks’ interest rates. Enditem

Source: Xinhua/NewsGhana.com.gh

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