This archive report was first published on 20 July 2020.
On Monday, July 20, 2020, the Central Bank of Kenya (CBK) announced that the government had borrowed Sh45.5 billion in the latest Treasury bill auction, as interest rates continued to fall for the seventh straight week.
The high demand for short-term government securities was driven by high liquidity, with investors bidding a total Sh65.17 billion in last week's auction for 91,182 and 364-day Treasury bills against the advertised Sh24 billion, a subscription rate of 271.54 percent.
According to the CBK, the government took up Sh45.5 billion, leaving Sh20.8 billion in maturities and resulting in a new Sh24.7 billion borrowing.
Interest rates on the Treasury bills, which are already at seven-year lows, declined further, with the 91-day paper falling to 6.01 percent from 6.27 percent in the previous auction, and the 182-day paper declining to 6.52 percent from 6.76 percent previously.
On the 364-day paper, the rate last week stood at 7.46 percent, down from 7.7 percent in the previous auction.
Analysts attribute the decline in interest rates to increased competition among investors for a piece of the pie in an economy offering few returns outside of the fixed income segment.
