In the twelfth week of the year, the Central Bank of Kenya (CBK) Treasury bills auction remained oversubscribed, receiving KES 35.5 billion in bids against an offer of KES 24 billion, translating to an overall subscription rate of 146.9%.
Demand was heavily concentrated on the 91-day paper, which recorded a subscription rate of 361.3%. The bill attracted bids amounting to KES 14.5 billion against a target of KES 4.0 billion. The heavy subscription on the short tenor signals strong liquidity and flexibility preference by investors, alongside anticipations of a rise in interest rates. The paper’s weighted average interest rate stood at 7.5679%, up 0.43 bps compared to the previous auction.
The 364-day paper followed, recording a subscription rate of 105.1%. It received KES 10.5 billion in bids against an offer of KES 10.0 billion. The paper’s weighted average interest rate declined by 0.58 bps compared to the previous auction to 7.8399%.
The 182-day paper attracted KES 10.3 billion in bids against a target of KES 10.0 billion, representing a performance rate of 103%. The bills weighted average interest rate declined by 13.60 bps to 8.3445%.
Out of the bids received, the CBK accepted KES 29.1 billion.
CBK Outlook: Geopolitical Risks May Sustain Yield Pressures
Escalating geopolitical tensions in the Middle East continue to pose risks to Treasury bill yields through the inflation channel. Heightened tensions, particularly in key oil-producing regions, tend to disrupt energy supply and exert upward pressure on global oil prices, thereby fueling inflation. This may force the CBK to maintain a relatively tight monetary policy stance, which in turn could lead to increased treasury bill yields.
