Kenya’s short-term government securities remained undersubscribed for the fourth week in a row on account of tight liquidity in the money market.
The 182-day and 364-day bills this week recorded a subscription of 93 percent and 44 percent respectively, Central Bank of Kenya (CBK) auction data showed Thursday.
“This week, the CBK offered 182-day and 364-day Treasury bills worth 118 million U.S. dollars. The total number of bids received amounted to 56 million dollars and 26 million dollars respectively,” said the CBK, with the papers attracting 10.5 percent and 11 percent yields.
A similar scenario was recorded the previous week, where the 182-day paper recorded 94 percent subscription while the 364-day 48 percent.
“There has been a shift by investors on the subscription, with most investing in the 91-day and 182-day papers, an indication of the uncertainties in the interest rates environment. The 182-day paper continues to offer investors the best returns on a risk-adjusted basis,” noted Cytonn, a Nairobi-based investment firm.
Liquidity in the money market has been tight in the past weeks, according to analysts, and was further squeezed last week when the CBK mopped up 15 million dollars from the market.
“The money market was relatively tight during the week, on account of maturing securities under Central Bank of Kenya short-term liquidity support to banks (reverse repo maturities),” said CBK in its latest report on money market.
Tight liquidity position, according to Cytonn, has been seen this week in increased activity in the reverse repo market at a rate of 10 percent and Treasury bill rediscounting worth 4 million dollars. Enditem