The Central Bank of Kenya (CBK) on Thursday accepted Sh44.80 billion in the latest Treasury Bills auction, with investor interest heavily concentrated on the one-year paper.
The auction results point to falling yields across all tenors, reflecting easing borrowing costs and sustained appetite for longer-term government securities.
According to the auction summary, “CBK accepted Sh44.80 billion out of Sh74.11 billion in bids in the latest T-Bill auction.” While demand remained strong overall, the central bank applied selectivity in the allocation of securities.
Investors showed a clear preference for the 364-day Treasury Bill. The report noted, “Demand was overwhelmingly concentrated in the 364-day.” This tenor attracted the largest share of bids and allotments, highlighting a trend in which market players aim to secure returns over a longer period amid expectations of shifting rates.
The auction also saw yields decline across all instruments, signaling a moderation in the cost of borrowing for the government. For the 91-day paper, the results read, “• 91-day: 7.16 billion @ 7.6094 percent (2.04bps),” indicating a 2.04 basis point fall from the previous auction. The 182-day bill recorded a similar drop, with “• 182-day: 6.86 billion @ 7.7701 percent (1.80bps).”
The 364-day Treasury Bill dominated the auction both in demand and allocation. “• 364-day: 30.78 billion @ 8.9755 percent (22.44bps),” the summary stated. The 22.44 basis point decline was the steepest among all tenors, reflecting strong market demand for the one-year instrument.
Overall, the CBK accepted Sh44.80 billion out of total bids worth Sh74.11 billion, indicating a healthy bid-to-cover ratio and steady market liquidity. The concentration of bids on the 364-day bill suggests that investors are strategically positioning themselves for potential rate movements in the near term.
Shorter-dated papers continued to attract participation, though not at the same level as the one-year instrument. This pattern mirrors recent market behavior where banks, fund managers, and other institutional investors seek to lock in returns for medium-term holdings before further declines occur.
The decline in yields across all tenors could help reduce the government’s domestic borrowing costs if the trend continues. Lower yields mean the government pays less interest on newly issued debt, which could ease fiscal pressure and provide some budgetary room.
The auction results reaffirm the appeal of government securities to local investors. Treasury Bills remain a reliable, low-risk investment within Kenya’s financial markets, attracting consistent demand even in periods of shifting monetary conditions.
The steep drop in the 364-day rate was the most notable outcome, with over Sh30 billion accepted in this tenor alone, accounting for the bulk of total allotments. This shows investor confidence in the medium-term outlook and a preference for securing returns beyond the short-term horizon.
In summary, Thursday’s Treasury Bills auction reflects a market adjusting to falling yields while maintaining strong demand for government paper. The acceptance of Sh44.80 billion alongside broad rate declines points to lower borrowing costs and continued investor engagement in Kenya’s debt market.
