Investors are shunning government short term papers opting for papers with long term tenor due to better yield. The Central bank of Kenya says the 91 and 182 day treasury bills continue to attract low subscription compared to the 364 day bills which have been over-subscribed in the recent offers.
The average one year bill has a return of 11% compared to 8% for the 3 and 6 months bills.
The government securities market performance showed investors’ preference for longer dated securities last week majorly driven by better returns on papers with a longer tenor.
The Central Bank weekly report shows while the 91-day and 182-day Treasury bills were undersubscribed, the 364-day Treasury bills were oversubscribed.
In the week the government offered 3 month treasury bills worth Ksh 4 billion with investors offering Ksh 1.75billion.
The 6 month securities also attracted low subscription with investor’s snapping up Ksh 7 billion of the Ksh 10 billion that was on offer.
The average interest rates offered for the two instruments stands at 8.5%, a drop from the 12% they were fetching in the past.
However the one year Treasury bills received bids amounting to Ksh 12 billion against the offer of Ksh 10 billion, forcing the bank to take in the extra money to cover for the shortfalls in the short term papers.
As a composition of state domestic debt, treasury bills stand at 33% or Ksh 767 billion of the total debt owed by the state to local investors as of today morning.
Treasury bonds forms the lion share of government domestic debt at 1.55 trillion shillings or 66 percent of government’s total domestic debt.
Currently the total portfolio of government domestic debt stands at 2.3 trillion shillings.