The Central Bank of Kenya (CBK) raised KSh 13, 840.6 Million from the weekly Treasury Bills Auction held on Thursday, an undersubscription of 65.7%.
On behalf of the National Treasury, it had targeted KSh 24 Billion from the domestic market.
Investors opted for the longer-term KSh 10 Billion 364 days Treasury Bill where bids worth KSh 10.02 Billion was received and a similar amount accepted by CBK, representing an oversubscription of 100.21%.
The 182-day Treasury Bill, worth KSh 10 Billion received bids worth KSh 4,999.7 Million, a performance of 50% after the CBK accepted KSh 3.1 Billion.
Debt service in January amounts to Ksh.174.7 billion, a 137.3% increase over debt service in December 2020. This comprise of Ksh.128.8 billion in T-Bills, Ksh.31.1 billion in T-Bonds and Ksh.14.8 billion in coupon payments.
“The sharp increase in domestic debt service this month implies that a big proportion of funds raised particularly in T-Bill auctions will be directed towards debt redemptions rather than new borrowing,” notes Sterling Research analysts.
“We believe that the increase in financing needs coupled with continuous shortfalls in revenue collections will have a huge borrowing in the National Treasury’s borrowing strategy not only this month but also for the remainder of the 2020/21 fiscal year.”
In 2020, T-bills auction recorded an oversubscription with the average subscription rate coming in at 130.3 percent compared to an average of 118.7 percent in 2019.
The yields on the 91-day, 182-day, and 364-day T-bills declined to 6.9, 7.4, and 8.3 percent in 2020 from 7.2, 8.2, and 9.8 percent at the end of 2019, respectively.
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