If the trend in rising interest rates on the Central Bank of Kenya’s 182 Day Government Treasury Bill in recent weeks is anything to go by, today’s auction of the Treasury securities could see them offer their highest interest in five weeks.
For four consecutive weeks starting the week ended 22nd June 2012, the interest rate on 182 Day Treasury Bills has increased at each successive week’s auction from 10.86 percent to last week’s rate of 12.35 percent (CBK).
Today, the government is set to auction 3 billion shillings worth of 182 Day Treasury Bills which could carry a higher interest rate giving investors higher yields in the commercial paper. Results of today’s auction will be announced tomorrow.
Interest rates on the 182 Day Treasury Bills have declined since the beginning of the year where they stood at an average of 20.69 percent in January and declined over subsequent months to stand at an average of 12.71 percent by May this year (CBK).
Demand has fallen alongside the interest rates, with the 182 Day showing a performance rate of 42.8 percent last week based on the value of bids made versus the value of Treasury bills on offer. In comparison, 182 Day Treasury Bills showed a performance rate of 227.3 percent in mid-February this year when they were offering 19.84 percent interest compared to last week’s 12.35 percent.
Read more on lower Treasury bill demand here.