T-Bills auction oversubscribed by 187pc

March 13, 2014
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Standard Investment Bank Research said this confirms CBK's statement last week that the market has excess liquidity which prompted increased mop-up/FILE
Standard Investment Bank Research said this confirms CBK’s statement last week that the market has excess liquidity which prompted increased mop-up/FILE
NAIROBI, Kenya, Mar 13 – The Central Bank of Kenya (CBK) 182 and 364 day Treasury Bills auction has been oversubscribed by 187 percent attracting total bids of Sh17.27 billion against the Sh6 billion on offer.

Standard Investment Bank Research said this confirms CBK’s statement last week that the market has excess liquidity which prompted increased mop-up.

“Despite continued easing of interest rates, investors opted for the 182 day paper over the 364 day as the 182 day paper posted a performance rate of 318.6 percent versus 257.2 percent for the 364 day,” the research bank says.

The total number of bids for the 182 day paper received was 115 amounting to Sh9.56 billion while the 364 day paper received 106 bids amounting to Sh7.72 billion.

“The weighted average rate of accepted bids, which will be applied for non-competitive bids, was 10.045 percent for the 182-day and 10.414 percent for 364-day Treasury Bills,” CBK says.

Of total bids received, CBK accepted 81.1 percent a total of Sh14.1billion.

The 182 Day Treasury Bills are a debt obligation issued by CBK on behalf of the Kenya government for six months at either a discount or face value, at a competitive auction on a weekly basis while the 364 day Treasury Bills are issued for one year.

The instrument is sold to an investor at below the face value and then redeemed at maturity at the full face value.

The difference between the discounted price and the face value determines the interest earned.

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