The Central Bank of Kenya (CBK) will today auction 182 day Treasury Bills worth KES 3 billion. This comes after last week’s auction of Treasury Bills and a Treasury bond worth KES 2 billion and KES 5 billion respectively.

Last week the Treasury bills were oversubscribed by 137% while the bond was oversubscribed by 554%. These high subscription percentages were seen as an effort by investors to benefit from the high interest rates before they begin to fall. Market sentiments are that the yield on government securities will begin to decline as the tough monetary stance taken by the CBK over the last few months has yielded positive results.

At this auction it will be worthwhile to observe the number of bids the CBK will receive although it is highly possible that it may be much less than the 137% observed last week.

Tomorrow the Monetary Policy Committee (MPC) is expected to set the new Central Bank Rate (CBR) and this may have an effect on whether or not commercial banks bid for today’s auction in anticipation that the CBR may fall.