CBK (Central Bank of Kenya) accepted bids worth KSh 18.4bn from investors in last week’s bond switch auction where investors opted to move from the 5-year Treasury Bond, first sold in 2021 to a higher-yielding and longer-dated 15-year paper that was first sold in 2019,
CBK Auction results show that investors submitted bids worth KSh 22.2bn against a target of KSh 15.0bn, resulting in a subscription rate of 148.1%.
Analysts at Standard Investment Bank(SIB) believe investors took the opportunity to extend the duration of their portfolios (especially fund managers keen to manage their cash flows), thereby locking in the comparatively attractive 12.34% coupon rate on 15-year bond amid recent rate declines.
Furthermore, the 15-year paper offered relatively lower withholding tax requirements, thereby improving net yield.
This auction marked the second switch auction this financial calendar, which is part of the CBK liability management operations that seek to use buybacks and switches to actively manage maturity risk, reduce government borrowing costs, and smoothen the redemption profile of domestic debt.
CBK Treasury Bills Auction Results
Meanwhile, demand for Treasury Bills fell to their lowest levels since October 18th 2021.The auction had an overall subscription rate coming in at 146.9% from 182.3% in the week prior week.
Investors submitted bids totalling KSh 35.3bn, of which the fiscal agent accepted 82.5%. This amount was higher than the maturity amounts, resulting in a net borrowing of KSh 1.8bn.
In absolute terms, the 91-day paper attracted the highest demand, receiving approximately 41.0% of the total submitted bids and a subscription rate of 361.3%, as investors weigh liquidity considerations in light of ongoing geopolitical tensions.
The 364-day paper recorded a performance rate of 105.1%, while the 182-day paper reported a subscription rate of 103.0%.
Overall, CBK accepted KSh 29.1bn, with the weighted average rate of accepted bids at 7.57%, 7.84% and 8.34%; a drop of13.6bps for the 91-day, 182-day, and 364-day papers.
According to the latest weekly CBK Report, the composition of Government Domestic Debt as at March 13th 2026 was made up of 16.63% Treasury Bills(excluding Repos) at 16.63%, Treasury Bonds at 80.60%, Overdraft at CBK at 1.25%, Other Domestic Debt( 1.12%) and IMF loan at 1.12%
ALSO READ: Central Bank of Kenya raises KSh 61 Bn for Budgetary Support in March
Leave a comment