Kenya’s latest Treasury-bill auction attracted KSh56.74 billion in bids against KSh28 billion offered, taking the overall performance rate to 202.63%. However, the headline oversubscription masked a sharp split by maturity: investors piled into the 91-day and 182-day papers while the 364-day bill remained undersubscribed.
The official auction results show that the government accepted KSh44.32 billion, substantially more than the advertised amount, while weighted average rates edged down across all three tenors. The pattern points to continued demand for government debt, but with investors showing a clear preference for shorter maturities.
Key Overview
- Treasury bills received KSh56.74 billion in bids against KSh28 billion offered, equivalent to a 202.63% overall performance rate.
- The 91-day bill attracted KSh23.70 billion in bids against KSh8 billion offered, a 296.22% performance rate.
- The 182-day bill drew KSh26.88 billion against KSh10 billion offered, equivalent to 268.76%.
- The 364-day bill received only KSh6.16 billion against KSh10 billion offered, producing a 61.61% performance rate.
- CBK accepted KSh44.32 billion across the three tenors.
- Accepted yields eased to 8.7692% for 91 days, 8.9400% for 182 days and 9.0323% for 364 days.
Short-Term Bills Capture Most of the Demand
The strongest appetite was concentrated at the front end of the yield curve. Of the KSh56.74 billion submitted, about 89% was directed toward the 91-day and 182-day bills. Investors bid KSh23.70 billion for the three-month paper and KSh26.88 billion for the six-month issue, far exceeding the KSh8 billion and KSh10 billion respective offer sizes.
By contrast, the one-year bill attracted KSh6.16 billion, well below the KSh10 billion offered. This means the overall auction was more than twice subscribed even though the longest Treasury-bill tenor failed to reach full subscription. The outcome suggests investors were willing to lend heavily to the government but preferred shorter exposure rather than locking money away for a full year.
CBK ultimately accepted KSh23.11 billion from the 91-day bill, KSh15.05 billion from the 182-day issue and KSh6.16 billion from the 364-day paper, bringing total accepted bids to KSh44.32 billion.
Yields Edge Lower Despite Heavy Bidding
The surge in bids did not translate into higher borrowing rates. Accepted weighted average interest rates declined slightly across all three maturities, with the 91-day rate easing from 8.7700% to 8.7692%, the 182-day rate moving from 8.9480% to 8.9400%, and the 364-day rate slipping from 9.0356% to 9.0323%.
Those movements were small, but they reinforce the picture of strong competition for shorter-dated government paper. Treasury bills are issued in 91-day, 182-day and 364-day maturities, allowing investors to choose how long they want to commit funds while receiving a government-backed return.
For the Treasury, strong demand at stable-to-lower rates is supportive because it provides domestic funding without an immediate upward push in short-term borrowing costs. Of the amount accepted in the latest auction, KSh26.29 billion was earmarked for rollovers or redemptions, with the remainder contributing to net financing requirements.
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Bond Switches Add to Government Funding Activity
Demand has also extended into Treasury-bond restructuring. A separate August 24 switch auction attracted KSh22.6 billion in bids against KSh15 billion offered, equivalent to a 150.6% performance rate. The transaction allowed eligible investors to exchange selected maturing securities for the longer-dated FXD4/2019/010 bond.
CBK has since opened another KSh10 billion Treasury-bond switch involving FXD1/2013/015 and FXD4/2019/010. Participation is voluntary, and eligible holders may switch part or all of their unencumbered holdings.
The source bond carries an 11.25% coupon and matures on February 7, 2028, while the destination bond has a 12.28% coupon and matures on November 12, 2029. Bidding closes on September 7, with settlement scheduled for September 9. Because the switch is conducted through a multi-price auction, investors’ actual returns depend on the yields and prices at which allocations are made rather than the coupon rate alone.
What the Auction Signals for Investors
The latest results show that appetite for Kenyan government securities remains strong, but the maturity split matters. Investors appear more comfortable concentrating funds in shorter-dated instruments, which offer faster access to principal and less exposure to changes in longer-term interest rates.
For the government, that demand provides useful domestic liquidity, although heavy reliance on shorter maturities can also increase refinancing needs because the debt must be rolled over more frequently. The next Treasury-bill auction continues the standard KSh28 billion offer structure, split between KSh8 billion in 91-day bills and KSh10 billion each in the 182-day and 364-day tenors.
The key test will be whether the strong short-term appetite persists and whether demand begins to strengthen again at the one-year end of the Treasury-bill curve.
Sources: Central Bank of Kenya / People Daily / Kenya Times
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