Serrari Group

In a move that holds implications for the financial landscape, the Central Bank of the country (CBK) has presented enticing rates of return to bidders in its latest auction. The auction, which featured Treasury Bills with durations of 91 days, 182 days, and 364 days, concluded with successful bidders securing rates of 13.1104%, 13.4381%, and 13.3402% respectively. This marks a notable increase from the prior auction’s rates of 12.6855%, 12.5579%, and 13.1072%.

The CBK’s Auction Management Committee (AMC), pivotal in the determination of outcomes, convenes on auction days at 4pm. The committee evaluates the received bids and determines both the cut-off rate and the successful weighted average of accepted bids. Results from the auction are disseminated through various channels, including the Treasury Mobile Direct (TMD) platform, Twitter, and the statistics section on the CBK website.

Successful bidders will typically receive Treasury Bills in accordance with their application, although the CBK reserves the right to issue bills for a lower amount. The subsequent steps for investors involve contacting the Central Bank or its branches to ascertain the success of their applications and the corresponding payment required for their Treasury Bills.

It is imperative for applicants to promptly communicate with the Central Bank to confirm their payment obligations. The deadline for payment falls on the following Monday at 2pm. Should Monday be a public holiday, the deadline shifts to the subsequent Tuesday. Investors have the flexibility to submit their payments in specified amounts through cash, banker’s cheques (for amounts under Kshs. 1 million), or KEPSS transfers (for larger amounts).

A noteworthy caution accompanies the process: successful applicants who fail to fulfill their payment obligations within the stipulated time may face restrictions on future investments in government securities.

Upon the conclusion of the 91-, 182-, or 364-day period, the face value of the Treasury Bill will be transferred to the designated commercial bank account as indicated in the Central Depository System (CDS) account. Alternatively, investors can opt to roll over their securities into upcoming issues. This requires submitting a rollover application form to the Central Bank before the closing of the sale period for the relevant bill.

Rollover instructions hinge on synchronization between the maturity date of the maturing security and the value date of the new Treasury Bill. The CBK follows a distinct protocol: only refund amounts generated from the new investment are transmitted, rather than remitting maturing proceeds into investors’ bank accounts. 

The implications of this auction extend beyond mere financial transactions. The rates offered and the process outlined hold significance for investors, the broader economic landscape, and the government’s financial operations. As the CBK prepares to announce the results of this auction, market participants and economic observers alike anticipate insights into the prevailing fiscal climate and its potential future trajectory.

August 13, 2023
Delino Gayweh
Serrari Financial Analyst

photo source Google

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