Treasury bills remained undersubscribed for the second straight week, pointing to cautious investor sentiment in the short-term securities market.
The Central Bank of Kenya (CBK) reported an overall subscription rate of 62.9%, a sharp drop compared to the 95.7% uptake seen the previous week.
Investor Preferences Shift
Demand for the 91-day paper, which has traditionally been the most attractive to investors, weakened significantly. The short-term note received bids worth KSh 1.6 billion against an offer of KSh 4.0 billion, translating to a subscription rate of 40.5%, down from 106.2% the prior week.
The 182-day paper saw bids worth just 19.4% of the amount on offer, a steep fall from 55.8% previously. Meanwhile, the 364-day paper remained the most favored, though its subscription rate also eased to 115.3%, compared to 131.3% last week.
Government Acceptance and Yields
Out of KSh 15.1 billion in bids received across all maturities, the government accepted KSh 15.0 billion, reflecting an acceptance rate of 99.3%.
Yields edged lower across the board, continuing a downward trend:
- 91-day paper: declined by 3.2 bps to 7.91% from 7.95%.
- 182-day paper: slipped by 2.5 bps to 7.99% from 8.01%.
- 364-day paper: eased by 0.4 bps to 9.53% from 9.54%.
Market Outlook
Analysts suggest that investors may be repositioning in anticipation of changing liquidity conditions and potential shifts in monetary policy. The sustained undersubscription highlights both tight market liquidity and investor caution in committing to government securities despite relatively stable yields.
